The spending multiplier indicates that:
A. changes in investment, government, or consumption spending trigger much larger changes in real GDP.
B. an autonomous increase in saving will cause output to rise by a multiple of the additional saving.
C. a market economy will be more stable than classical economists thought.
D. the marginal propensity to consume is greater than one.
Answer: A
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An increase in the price of poultry would lead to
a. a decrease in quantity demanded of fish and an increase in the demand for poultry. b. a decrease in quantity demanded of poultry and an increase in the demand for fish. c. an increase in quantity demanded of fish and a decrease in the demand for poultry. d. an increase in quantity demanded of poultry and a decrease in the demand for fish.
Table 30.1Number of workers (per hour)Total output (per hour)Marginal physical product (output per worker)Total revenue (dollars per hour)Marginal revenue product (dollars per hour worker)14---________---210________________________315________________________419________________________522________________________Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1, the marginal physical product of the third worker hired is
A. 15 units per hour. B. 3 units per hour. C. 4 units per hour. D. 5 units per hour.
The fair or flat tax suggested to make the income tax system more fair to the citizens would result in
A. decreasing the impact of automatic stabilizers. B. increasing the impact of automatic stabilizers. C. generate a larger revenue to the federal government and decrease deficits. D. not affect the effectiveness of automatic stabilizers.
Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he
will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What should he do? A) He should sell the machine now to make the most profit. B) It does not matter what he does; he is going to take a loss on his project. C) He should rewire the machine, complete the task and then sell the machine. D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time.