Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Table 10.1Spending CyclesChange in this Cycle's Spending and IncomeCumulative Increase in Spending and IncomeFirst-cycle spending$325$325Second-cycle spending________________Third-cycle spending________________In Table 10.1, what is the cumulative increase in expenditure by the end of the second cycle?
A. $585.
B. $260.
C. $65.
D. $390.
Answer: A
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Suppose when the price of calculators is $18, the quantity demanded is 90, and when the price is $22, the quantity demanded drops to 70. Using the mid-point method, the price elasticity of demand is:
A. 1.25 B. 25 percent C. 20 percent D. 25
The Bureau of Economic Analysis reported that business investment in the second quarter of 2012 was $1,483 billion, $97 billion less than in 2008. An increase in business investment ________.
Fill in the blank(s) with the appropriate word(s).
Which of the following equations is correct?
A) Real interest rate = Nominal interest rate + Inflation rate B) Real interest rate = Nominal interest rate - Inflation rate C) Real interest rate = Nominal interest rate × Inflation rate D) Real interest rate = Nominal interest rate / Inflation rate
Which of the following is not a significant source of revenue for the U.S. federal government?
A. Personal income taxes B. Corporate income taxes C. Payroll taxes D. Property taxes