Suppose the MPC in the economy in Figure 10.2 equals 0.75 and the shift from AD0 to AD1 was caused by a decrease in investment of $50 billion. What will happen to the equilibrium level of real output as a result of the initial $50 billion decrease?
A. It will fall by exactly $200 billion.
B. It will fall by more than $200 billion.
C. It will fall by less than $200 billion.
D. It will fall by less than $67 billion.
Answer: C
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A temporary embargo on oil from the Middle East going in to the United States would
A) shift both the short-run and long-run aggregate supply curves to the left. B) shift only the short-run aggregate supply curve to the left. C) shift the long-run aggregate supply curve to the right. D) shift only the long-run aggregate supply curve to the left.
Which of the following is NOT illustrated by a production possibilities frontier?
A) scarcity B) opportunity cost C) necessity for choice D) who gets the goods
Refer to the normal-form game of advertising shown below.Firm AFirm B??AdvertiseDo Not Advertise?Advertise$0,$0$175,$10?Do Not Advertise$10,$175$125,$125Suppose there is a 20 percent chance that the advertising game depicted in Figure 10-17 will end next period. What is the present value to firm B of cheating on the collusive strategy {do not advertise, do not advertise}?
A. $125 B. $10 C. $0 D. $175
If a bond's coupon adjusts to pay a constant real rate of return, then an increase in inflation would cause
A) the nominal coupon payment to rise. B) the nominal coupon payment to fall. C) the nominal coupon payment to remain unchanged. D) the bond's price to fluctuate wildly.