If the economy has an MPC of 0.8, by how much will a $50 billion increase in government purchases increase GDP? By how much will a $50 billion increase in taxes decrease GDP?
What will be an ideal response?
With an MPC of 0.8, the multiplier is 1/(1 - 0.8 ) = 5, so an increase in spending will increase GDP by $250 billion. The tax multiplier would equal -4, so the increase in taxes would reduce GDP by $200 billion.
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Suppose that Oscar sells pork in a perfectly competitive market. The market price of pork is $3 per pound. The marginal revenue generated by Oscar from selling the 12th pound of pork would be
A. $4. B. $3. C. $36. D. Not enough information is given to answer this question.
For a common resource, the equilibrium with no government intervention is such that ________ is less than ________
A) marginal private cost; marginal social benefit B) marginal social benefit; marginal social cost C) marginal private benefit; marginal social benefit D) total social benefit; total social cost
Zipco's accounting profit is equal to its
a. total revenue minus opportunity costs b. total revenue plus opportunity costs c. total revenue minus imputed costs d. total revenue minus explicit costs e. total revenue minus explicit and implicit costs
All of the following are variables that can be manipulated to affect fiscal policy, except one. Which is the exception?
What will be an ideal response?