The MPC shows the relationship between:
a. interest rates and investment.
b. disposable income and consumer spending.
c. saving and investing.
d. inflation and unemployment
Ans: b. disposable income and consumer spending.
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The multiplier is 5 and, as a result of a change in expenditure, equilibrium expenditure and real GDP change by $200 billion. What was the initial change in autonomous expenditure?
A) $20 billion B) $50 billion C) $1,000 billion D) $40 billion E) $200 billion
Bond prices in the marketplace will fall when
A. interest rates fall. B. the company is losing money. C. interest rates rise. D. the company is making money.
A citizen in a developing country with a currency policy of convertibility on the current account could engage in all of the following transactions except:
A. sell foreign currency resulting from the exports of manufactured t-shirts. B. sell foreign currency resulting from the sale of a U.S. treasury bond. C. purchase foreign currency in order to import a BMW. D. purchase foreign currency in order to purchase a U.S. treasury bond.
George always purchases the soda with the lowest price. For George, the cross price elasticity of demand for two brands of soda will be
A) equal to 0. B) negative. C) positive. D) impossible to determine without more information.