Suppose that when disposable income increases by $1,000, consumption spending increases by $750. Given this information, we know that the marginal propensity to consume (MPC) is
A) .25.
B) .75.
C) $1,000/$750 = 1.33.
D) 1/.25 = 4.
B
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At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP
A) equal to B) rising above C) greater than D) less than E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion. The table gives the aggregate demand and aggregate supply schedules for a nation.
What does the price elasticity of demand show?
In the market for sweaters, suppose Green's price elasticity of demand is 0.2, Smith's price elasticity is 1.2, and the price elasticity of all the other consumers is greater than 0.2 but less than 1.2 . Could the market price elasticity be less than 0.2 or greater than 1.2?
LRE. After a decrease in AD, there will immediately be _____
a. inflation and recession b. deflation and recession c. inflation and expansion d. deflation and expansion
If the federal budget goes from a budget deficit in Year 1 to a budget surplus in Year 2, does it follow that the federal government acted to raise taxes or cut government spending in Year 2?
What will be an ideal response?