The average propensity to save is
A. real consumption/real disposable income.
B. change in real consumption/change in real disposable income.
C. real saving/real disposable income.
D. change in real saving/change in real disposable income.
Answer: C
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A $1 million increase in investment spending will raise equilibrium output (real GDP) by:
a. less than $1 million. b. exactly $1 million. c. between $0.5 and $1.5 million. d. more than $1 million.
Suppose Lydia owns the only lawn-mowing business in the small town of Pleasant Pastures. There are 8 people each week whose lawns she might cut, each with a reservation price given in the accompanying table. Assume that the marginal cost of mowing each lawn is constant and equal to $25. CustomerReservationPriceA$36B$34C$32D$30E$28F$26G$24H$22If Lydia charges the same price to all of her customers, then what price should she charge if she wants to maximize her profit.
A. $32 B. $34 C. $30 D. $26
The balance-sheet channel of monetary policy works because it can:
A. change the value of a borrower's assets and liabilities, but it can't change a borrower's net worth. B. increase a borrower's asset value but not the burden of his/her liabilities. C. increase a borrower's assets and reduce the cost of his/her liabilities. D. none of the answers given is correct.
The largest proportion of the public debt is held by:
A) U.S. government agencies B) foreign individuals and institutions. C) the Federal Reserve System. D) the U.S. Treasury.