Assuming that beer is a normal good, what will happen to the demand for beer near college towns if student income increased?
a. Demand will fall because students love these beers
b. Demand will fall
c. Demand will rise
d. Supply would rise
Ans: c. Demand will rise
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The economy is in a recession. The government enacts a policy to increase purchases by $2 billion. The MPC is 0.8. What would be the full increase in real GDP from the change in government purchases at a given price level?
A. $16 billion B. $10 billion C. $6 billion D. $8 billion
In the Keynesian model in the long run, a decrease in the money supply will cause ________ in the real interest rate and ________ in the price level
A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease
A decline in the exchange rate could have been caused by which of these factors?
A) A decline in domestic output (income) B) An increase in the domestic real interest rate C) A decline in the world demand for domestic goods D) An increase in foreign output (income)
If the Gini coefficient is greater for Zambia than for the Netherlands, we can conclude that the
A. Distribution of income in the Netherlands is closer to being equal than in Zambia. B. Distribution of income in the Netherlands is as equal as it is in Zambia. C. Distribution of income in the Netherlands is less equal than in Zambia. D. Relative distributions of income in the two countries are the same.