The marginal propensity to consume (MPC) is equal to
A) 1 + MPS. B) 1 - MPS. C) MPS + 1. D) MPS - 1.
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Explain what the free market will do if exchange rates end up in the "right ranges."
What will be an ideal response?
The U.S. lowered tariffs in the 1850s because of a budget surplus
Indicate whether the statement is true or false
For a small country with a closed economy, if the marginal propensity to save is equal to 0.2, then the spending multiplier indicates that a $10 exogenous increase in government spending will lead to a $20 increase in gross domestic product (GDP).
Answer the following statement true (T) or false (F)