The size of the multiplier is equal to the:
A. slope of the consumption schedule.
B. reciprocal of the slope of the consumption schedule.
C. slope of the saving schedule.
D. reciprocal of the slope of the saving schedule.
D. reciprocal of the slope of the saving schedule.
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According to this Application, as the U.S. economy grew from the early 1990s, U.S. exports also increased as our demand for foreign products promoted growth in foreign countries. This increase in exports would tend to
A) decrease U.S. GDP and reduce unemployment in the short run. B) decrease U.S. GDP and increase unemployment in the short run. C) increase U.S. GDP and reduce unemployment in the short run. D) increase U.S. GDP and increase unemployment in the short run.
An economic model is
A) a generalization that summarizes all the normative assumptions we make about a particular issue. B) a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. C) a statement that describes how the world should be. D) a collection of facts that describe the real world.
Suppose marginal propensity to consume (MPC) is 0.7 and there is a $1,000 increase in autonomous consumption. Given this information, real GDP will increase by
A) $3,333.
B) $1,429.
C) $1,000.
D) $700.
Suppose the demand function for a good is expressed as Q = 100 - 4p. If the good currently sells for $10, then the price elasticity of demand equals
A) -1.5. B) -0.67. C) -4. D) -2.5.