If the level of investment spending increases by $100 and the MPC in the economy is 0.8, then the cumulative spending increase after three rounds of spending is
a. $280.
b. $260.
c. $244.
d. $220.
c
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A rise in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant
A) rise; LM; right B) rise; IS; right C) fall; IS; left D) fall; LM; left
Beginning in the mid-1970s, Congress deregulated several industries including airlines and trucking.
Answer the following statement true (T) or false (F)
In a simple, private economy, suppose that the MPC is 0.8 and investment rises by $20 million. At the new equilibrium, how much will saving have increased?
A. $8 million B. $16 million C. $20 million D. $80 million E. $100 million
Despite the fact that water is necessary to sustain life, it is less expensive than milk. Economic theory suggests that this is so because
A. there is a conspiracy among milk producers to hold prices artificially high. B. sellers of water hold the price of water artificially low because of its importance. C. although the total utility of water consumption is high, its marginal utility per dollar spent is low when compared to milk. D. consumers are irrational.