Suppose lower expectations lead to a decrease of $240 in desired investment in the economy and the marginal propensity to consume is 0.75.Table 10.2Spending CyclesChange in this Cycle's Spending and IncomeCumulative Decrease in Spending and IncomeFirst-cycle spending-$240-$240Second-cycle spending________________Third-cycle spending________________In Table 10.2, what is the change in the third cycle of spending resulting from the initial drop in investment?
A. -$135.00.
B. -$420.00.
C. -$180.00.
D. -$555.00.
Answer: A
You might also like to view...
According to the ratings given by Moody's and Standard and Poor's, _____ bonds are corporate bonds that carry the lowest risk and offer a lower yield
a. A+ b. white collar c. AA d. blue chip e. AA+
In economics, the study of the decisions of firms in industries where the profits of each firm depend on its interactions with other firms is called
A) decision theory. B) game theory. C) market structure analysis. D) profit analysis.
Lisa decided to give up being on the soccer team for piano lessons. Her opportunity cost of pursuing piano lessons is
A) zero, as long as someone other than Lisa pays for the lessons. B) zero, as long as someone other than Lisa paid for her soccer fees and equipment. C) the satisfaction Lisa had enjoyed by being on the soccer team. D) the satisfaction Lisa enjoys by studying the piano. E) both A and B above.
Which of the following would generally cause firms to expand output in the short run?
a. a proportional increase in the prices of goods and services and the costs of producing them b. higher profit margins as the result of an unexpected increase in the prices of goods and services c. an unexpected reduction in aggregate demand d. an increase in wages and the prices of other resources