The spending multiplier:
A. grows larger as the marginal propensity to consume increases.
B. grows larger as the marginal propensity to consume decreases.
C. grows smaller as the marginal propensity to consume increases.
D. None of these is true.
A. grows larger as the marginal propensity to consume increases.
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If the economy is in equilibrium with real GDP less than potential GDP, there is ________ gap, and a fiscal policy that ________ is appropriate
A) a recessionary; decreases aggregate demand B) an inflationary; increases aggregate demand C) a recessionary; increases aggregate demand D) an inflationary; decreases aggregate demand E) a recessionary; increases potential GDP
Suppose the governor of California has proposed increasing toll rates on California's toll roads, and has presented two possible scenarios to implement these increases
Following are projected data for the two scenarios for the California toll roads: Scenario 1: Toll rate in 2015: $10.00. Toll rate in 2019: $22.50 For every 100 cars using the toll roads in 2015, only 81.6 cars will use the toll roads in 2019. Scenario 2: Toll rate in 2015: $10.00. Toll rate in 2019: $17.50 For every 100 cars using the toll roads in 2015, only 96.2 cars will use the toll roads in 2019. a. Using the midpoint formula, calculate the price elasticity of demand for Scenario 1 and Scenario 2. b. Assume 10,000 cars use California toll roads every day in 2015. What would be the daily total revenue received for each scenario in 2015 and in 2019? c. Is demand under Scenario 1 and under Scenario 2 price elastic, inelastic, or unit elastic. Briefly explain. (For above questions, assume that nothing other than the toll change occurs during the time frame listed that would affect consumer demand.)
If the public has correct rational expectations and the Fed reduces both reserve requirements and the discount rate, it would be expected to result in: a. a higher level of real output and a lower price level. b. a lower price level but no change in real output
c. a higher price level and a reduced level of real output. d. a higher price level but no change in real output.
In the real world, it is likely that wage negotiations:
A. often end with the worker's enjoying a larger payoff, since they are not losing as much in profit as the company. B. often end with the company enjoying a larger payoff, since they can afford to be more patient. C. do not drag on for years. D. drag on for years to see which side is more patient.