If the marginal propensity to save is 0.4, then a $2 million increase in disposable income will
A) increase consumption by $5 million. B) decrease consumption by $1.2 million.
C) increase consumption by $1.2 million. D) decrease consumption by $5 million.
C
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Coffee and cream:
A) are both luxury goods. B) are complements. C) are both more inelastic in demand in the long run than in the short run. D) have a positive cross price elasticity of demand.
In 1910, the largest U.S. industry as ranked by value added was
a. machinery. b. cotton goods. c. tobacco manufactures. d. railroad cars.
Two goods are considered substitutes only if a(n):
a. decrease in the demand for one leads to a decrease in the supply of the other. b. increase in the demand for one leads to a decrease in the supply of the other. c. increase in the price of one leads to an increase in the demand for the other. d. decrease in the price of one leads to an increase in the demand for the other. e. decrease in the supply of one leads producers to switch to production of the other.
Refer to the graph below. An expansion of the economy's production possibilities can, by itself:
A. Never cause inflation
B. Never cause price level to fall
C. Cause a decrease in real output
D. Cause a decrease in employment level