Suppose the equilibrium level of national income is $800 billion and the MPC is 0.8 . Suppose as well that people decide to increase their saving by $30 billion. Before this change, people intended to save $100 billion and producers intended to invest $100 billion. The new equilibrium level of national income is
a. $600 billion
b. $650 billion
c. $680 billion
d. $730 billion
e. $800 billion
B
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The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________
A) $240 an hour B) $180 an hour C) $1.20 a hot dog D) $60 an hour
Fogel's (1964) work on railroads after the Civil War shows that they did not dominate the markets for steel, coal or wood
Indicate whether the statement is true or false
If the short-run Phillips curve was a straight line with a very steep slope, the inflation costs of reducing unemployment: a. are fairly low
b. are fairly high. c. depend on the current rate of inflation. d. rises as the economy approaches full employment.
If the economy is producing a level of output that is consistent with the potential output level, and government purchases increase, describe what happens in terms of the long-run real interest rate, and why, to keep the economy at its potential output level.
What will be an ideal response?