The marginal propensity to consume goods and services can be broken out into the:
a. marginal propensity to invest plus the marginal propensity to save.
b. marginal propensity to consume home-produced goods and services plus the marginal propensity to consume imports.
c. marginal propensity to spend minus the marginal propensity to save.
d. marginal propensity to consume goods plus the marginal propensity to consume services.
Answer: b. marginal propensity to consume home-produced goods and services plus the marginal propensity to consume imports.
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The income-expenditure model is best used for short-run analysis of economic fluctuations
Indicate whether the statement is true or false
In theory, differences in output across economies and over time might be the result of differences in either capital input, labor input, or productivity
The evidence points clearly to productivity as a more likely and powerful source of growth differences. Which aspects of the Solow growth model help to explain why the inputs of capital and labor contribute little to growth of output, relative to productivity?
If Q = K1/2L1/2 the MPK is
a. constant b. diminishing c. increasing
Which of the following would likely cause aggregate demand to shift to the right?
A. Consumer confidence regarding future income increases B. A tax credit for small businesses is issued C. The government builds new highways D. All of these are likely to cause aggregate demand to shift to the right.