If the marginal propensity to consume (MPC) is 0.80, the value of the spending multiplier is:
A. 2.
B. 5.
C. 8.
D. 10.
Answer: B
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A lump-sum tax:
A. charges the same amount to each taxpayer, regardless of economic behavior or circumstances. B. refers to annual, rather than quarterly tax payments throughout the year. C. is tied to spending habits, not income levels. D. is tied to income levels, not spending habits.
________: the amount by which the quantity supplied at a given price exceeds the quantity demanded
Fill in the blank(s) with correct word
Of the following, which is true of the relationship between the quantity of a good supplied and its price?
a. As price increases, the quantity supplied usually decreases. b. As price increases, the quantity supplied usually increases. c. As price increases, supply increases. d. When demand increases, so will supply. e. They always meet at the point of equilibrium in the market.
In a world of perfect knowledge and communication, competitive markets, and no uncertainty,
a. there would be neither economic profits nor economic losses. b. economic profits would exist, but losses would be eliminated. c. economic profits and losses would exist to a greater degree than presently is the case. d. there would be economic profits; there is not enough information to comment on economic losses.