If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending of $2,000 will increase income by
A. $5,500.
B. $8,000.
C. $10,000.
D. $20,000.
Answer: B
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Poverty is defined in two ways: the absolute concept of poverty and the relative concept of poverty.
Answer the following statement true (T) or false (F)
The full-employment and full-adjustment level of real Gross Domestic Product (GDP) in the economy is represented by
A) the horizontal line at the price level. B) the LRAS curve. C) the distance between the LRAS curve and the AD curve. D) the AD curve.
If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer
payments are $20 million, then GDP is A) $790 million. B) $800 million. C) $830 million. D) $850 million.
The aggregate supply curve that defines the level of full employment or potential output based on a given amount of resources, efficiency, and technology in the economy is called:
A) short-aggregate supply curve. B) long-run aggregate supply curve. C) intermediate aggregate supply curve. D) none of the above.