Given full-employment output = $2,800, equilibrium output = $2,500, and MPS = 0.25, which of the following changes would most likely bring the economy to a full-employment level of national output?
A. $300 decrease in taxes.
B. $75 increase in government spending.
C. $75 decrease in taxes.
D. $300 increase in government spending.
Answer: B
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When the receipts given by goldsmiths to depositors were used to make purchases,
A. the gold standard was created. B. existing banking laws were violated. C. the receipts became in effect paper money. D. a fractional reserve banking system was created.
The amount that must be paid to an individual to get them to invest in the industry is
A) a normal rate of return. B) the explicit costs. C) reinvestment. D) financial capital.
In the efficiency wage model with the efficiency wage above the market-clearing wage, the level of employment depends on
A. the intersection of labor supply and labor demand. B. labor demand alone. C. labor supply alone. D. the marginal productivity of capital and the marginal productivity of labor.
Both opponents of and proponents of government intervention most likely would agree with which of the following?
A. The market is inherently fair. B. Property rights eliminate the need for government. C. Property rights must exist for a market to operate. D. Government can and does create proper incentives to correct for externalities.