Suppose that when income taxes are reduced by $400 billion, households increase consumption by 80% of the resulting change in disposable income. Suppose also that the multiplier is 2. At a given price level, the aggregate demand curve shifts to the right by
A) $320 billion.
B) $400 billion.
C) $640 billion.
D) $800 billion.
Ans: C) $640 billion.
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For a monopsony the labor supply curve
A) does not exist. B) is the marginal product of labor curve. C) is the marginal cost of labor curve. D) lies below the marginal cost of labor curve.
Using the utility possibilities frontier above explain three ways that this society of two individuals can be made better off without making anyone worse off if it starts at point A
What will be an ideal response?
If Y = $500 billion, autonomous consumption = $300 billion, and the marginal propensity to save = 0.20, then saving will equal:
a. ?$200 billion. b. $200 billion. c. ?$100 billion. d. $100 billion. e. $40 billion.
The most common estimate of the value of transactions used to estimate velocity is
a. real GDP. b. total sales. c. nominal GDP. d. cash balances.