Suppose the marginal propensity to consume (MPC) equals 0.80, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by
A) $100.
B) $400.
C) $500.
D) $800.
Answer: C) $500.
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Labor hoarding occurs when
A) firms keep good workers so other firms can't hire them. B) the unemployment rate exceeds the natural rate of unemployment. C) involuntary unemployment exceeds voluntary unemployment. D) because of hiring and firing costs, firms retain workers in a recession that they would otherwise lay off.
Isoquants that are downward-sloping straight lines exhibit
A) an increasing marginal rate of technical substitution. B) a decreasing marginal rate of technical substitution. C) a constant marginal rate of technical substitution. D) a marginal rate of technical substitution that cannot be determined.
The growth produced by markets:
A. affects the wealthy more than it affects the poor. B. makes everyone better off and improves the distribution of income as well. C. affects the level of income but not its distribution. D. makes the average person better off but may worsen the distribution of income.
A decrease in aggregate demand is seen as a(n):
A. upward movement along the aggregate demand curve. B. downward movement along the aggregate demand curve. C. shift to the left in the aggregate demand curve. D. shift to the right in the aggregate demand curve.