To answer the next question, use the information in the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5. Change in IncomeChange in ConsumptionChange in SavingsAssumed increase in investment$5.00 $1.25Second round $2.81 All other rounds 8.44 Totals 5.00The change in income in round two will be
A. $2.81.
B. $3.75.
C. $0.94.
D. $4.00.
Answer: B
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Suppose the market for grass seed is expressed as:
Demand: QD = 100 - 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at one. Yet with the new supply curve, consumers pay a larger share of a specific tax. Why?
Which of the following would not increase French exports to the United States?
a. an appreciation of the U.S. dollar b. an appreciation of the euro c. a depreciation of the euro d. an increase in French preferences for American goods e. an increase in real income in France
In measuring the sensitivity of demand, the
a. price and income elasticities refer to movements along the demand curve; other elasticities refer to shifts of the entire demand curve b. price and cross-price elasticities analyze movements along the demand curve; other elasticities refer to shifts of the entire demand curve c. income and cross-price elasticities refer to movements along the demand curve; price elasticity refers to shifts of the entire demand curve d. price elasticity refers to movements along the demand curve; income and cross-price elasticities refer to shifts of the entire demand curve e. income elasticity refers to movements along the demand curve; other elasticities refer to shifts of the entire demand curve
A complicating factor in international trade is that
a. barter is the basis for trade between countries; money is not used. b. gold is used for payments; there are no international payments without gold. c. many other countries prefer to use the U.S. dollar as currency, causing monetary shortage in the United States. d. trade between countries requires different currencies rather than one currency.