Suppose that the consumption function crosses the 45-degree line at a disposable income level of $800 . Assume further that saving equals $200 when disposable income is $1,300 . This implies that the MPC must equal 0.6
a. True
b. False
Indicate whether the statement is true or false
True
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Macroeconomics helps explain economic fluctuations, why the economy shrinks and expands and why some of the economy's resources are idle
Indicate whether the statement is true or false
If the contribution to output of an additional unit of the variable input exceeds the average contribution of the variable inputs used,
A. the average product will be at its minimum. B. the average contribution must rise. C. the total product will begin to decline. D. the average contribution must fall.
The Keynesian analysis of fiscal policy argues that:
A. fiscal policy should generally be expansionary except during periods of economic recession. B. fiscal policy should generally be restrictive except during inflationary booms. C. the federal budget should be balanced annually except during war. D. the federal budget should be used to maintain aggregate demand at a level consistent with full employment.
Suppose the income tax rate is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on all income above $70,000. Family X has income of $100,000 while Family Y has income of $40,000. The marginal tax rates faced by the two families are
A. 30 percent on X and 20 percent on Y. B. 40 percent on X and 10 percent on Y. C. 30 percent on X and 30 percent on Y. D. 40 percent on X and 20 percent on Y.