If the marginal propensity to consume (MPC) is less than 1 and a household's disposable income increases by $2,000, the household's consumption will _____
Fill in the blank(s) with the appropriate word(s).
increase by less than $2,000.
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Situation 37-2 Dan and Ann live in the same community and both can participate in two activities, producing and stealing. Refer to Situation 37-2. If Dan's MB/MC ratio for producing is currently greater than his MB/MC ratio for stealing, then he will
A) steal more and produce less. B) steal less and produce less. C) produce more and steal more. D) produce more and steal less.
If the economy experiences a recessionary gap then:
A. aggregate expenditures exceed the level of spending necessary to provide for full employment. B. Keynesian economics would recommend a reduction in government spending or an increase in taxes. C. Keynesian economics would recommend an increase in government spending or a decrease in taxes. D. the equilibrium level of output and income is above full employment.
Which of the following statements about positive economic analysis is true?
A) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. B) There is much less disagreement among economists over normative economic analysis than over positive economic analysis. C) There is much more disagreement among economists over positive economic analysis than over normative economic analysis. D) Unlike positive economic analysis, normative economic analysis can be tested.
The GDP deflator is the
A. difference between GDP and national income. B. price index used for the wholesale market. C. index used to measure deflation but not inflation. D. broadest-based price index available.