Answer the following statements true (T) or false (F)
1. The classical economists held that the rate of interest would equate planned investment and planned saving, so that all saving would eventually be invested.
2. According to the Keynesian analysis, equilibrium occurs at the point where total aggregate expenditure equals total output.
3. According to the Keynesian analysis, as income increases, the marginal propensity to consume will rise.
4. According to the Keynesian analysis, equilibrium will occur where planned injections equal planned leakages.
5. Any time that planned leakages exceed planned injections, the economy will expand.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
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An open market purchase is where the Fed
What will be an ideal response?
The incentive to charge a low price even though it leads to lower profits in Figure 8.9 is an example of:
A. the duopolists' dilemma. B. tying products. C. scarcity and choice. D. the economic problem.
Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $32,000 a year and Family B
earns $70,000 a year. Both families each receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise? What will be an ideal response?
Workers expect inflation to fall from 4% to 1% next year. As a result, this should
A) shift the short-run aggregate supply curve to the left. B) shift the short-run aggregate supply curve to the right. C) move the economy up along a stationary short-run aggregate supply curve. D) move the economy down along a stationary short-run aggregate supply curve.