Assume that the marginal propensity to consume in an economy is 0.75. If the economy's full-employment real GDP is $900 billion and its equilibrium real GDP is $800 billion, there is a recessionary expenditure gap of
A. $133 billion.
B. $25 billion.
C. $100 billion.
D. $400 billion.
Answer: B
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Which one of the following statements is most correct?
A) Any central bank purchase of assets automatically results in an increase in the domestic money supply, while any central bank sale of assets automatically causes the money supply to decline. B) Any central bank purchase of assets results in an increase in the domestic money supply, while any central bank sale of assets causes the money supply to decline. C) Any central bank purchase of assets automatically results in a decrease in the domestic money supply, while any central bank sale of assets automatically causes the money supply to decline. D) Any central bank purchase of assets automatically results in a decrease in the domestic money supply, while any central bank sale of assets automatically causes the money supply to increase. E) Any central bank purchase of assets automatically results in an increase in the domestic money supply, while any central bank sale of assets does not necessarily affect the money supply.
When the price of a good is constant, marginal revenue is the same as
a. total revenue b. average total cost c. price d. quantity of output e. profit per unit
Which of the following characterizes the Monetarist viewpoint?
a. They believe that money can never affect investment. b. They believe that monetary policy is transmitted to the economy only through its effects on the interest rate and investment. c. Both a and b are part of the debate. d. Neither a nor b are part of the debate.
Monetary stimulus will fail if
A. Banks lend too much money. B. Lower interest rates cause households to not refinance mortgages and not apply for new consumer loans. C. Consumers spend too much money, creating a shortage of money. D. Short-term interest rates are affected but long-term interest rates are not.