Given the consumption equation C = $500 billion + 0.80Y, an increase in national income from $6,000 billion to $7,000 billion will cause consumption to increase by
a. $800 billion
b. $1,000 billion
c. $1,300 billion
d. $1,500 billion
e. $1,800 billion
A
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The government redistributes funds via transfer payments in order to ________
A) reduce the number of private transactions B) increase competition among domestic producers C) finance the operation of its various departments D) reduce inequality among the citizens
Which of the following events occur when fiscal expansion is used without accommodating monetary policy?
A) Total government spending increases (or net taxes decrease). B) Total private induced spending increases. C) Private induced spending decreases. D) A and B are both correct.
Suppose Apple announces that its earnings for the fourth quarter of 2013 rose to $2 billion. As a result of this announcement the price of Apple's stock does not change. The best explanation of this is
A) market participants were expecting Apple's earnings to be greater than $2 billion. B) market participants expected Apple's earnings to be $2 billion. C) market participants expected Apple's earnings to be less than $2 billion. D) market participants have adaptive expectations.
The process of marking to market:
A. involves the margin accounts of only the sellers of future contracts. B. is done by the clearing corporation to reduce risk in futures contracts. C. involves the margin accounts of only the buyers of future contracts. D. usually requires margin accounts to be adjusted weekly by the clearing corporation.