For a regulated natural monopoly, an average cost pricing rule sets price equal to
A) average fixed cost.
B) average total cost.
C) average external cost.
D) average variable cost.
B
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Let the marginal leakage rate be 0.5 while the marginal propensity to consume is 0.8. Then a $50 million reduction in autonomous taxes will cause autonomous consumption to ________ and equilibrium income to ________
A) fall by $50 billion; fall by $100 billion B) rise by $50 billion; rise by $100 billion C) fall by $40 billion; fall by $200 billion D) rise by $40 billion; rise by $80 billion
If firm-level asymmetric information becomes more severe, then
A) investment demand increases. B) investment demand decreases. C) investment demand does not change. D) it is impossible to tell.
The concept that increased government spending will lead to lower investment and consumer spending is referred to as the
A) inflationary effect. B) crowding-out effect. C) aggregate demand effect. D) Keynesian effect.
Which government policy raises the interest rate and raises investment spending?