Assume the price of good X is Px, price of good Y is Py, and B is the budget. The formula for the budget line for these two goods is:
a. PyQy / PxOx.
b. PxB + PyB = B.
c. PxX + PyY = B.
d. (1 ? Py / B) Px.
c
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In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Short-run equilibrium output in this economy equals:
A. 1,440. B. 1,000. C. 1,160. D. 1,280.
An expansionary fiscal policy may be:
A. offset by lowering tax rates. B. reinforced by raising tax rates. C. partially offset by the crowding-out effect. D. reinforced by the crowding-out effect.
Spot exchange typically involves:
A. some transaction costs. B. long-term contracts. C. extremely high transaction costs. D. no transaction costs.
Which of the following is NOT true about this national income equation:
A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. B) For the current account, CA, to improve, we may have to save less to maintain the same amount of investment that includes foreign saving. C) For the current account, CA, to improve, the government may have to run budget surplus. D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country.