Suppose that the marginal propensity to consume (MPC) is .75 and there is an increase in investment spending of $100,000. As a result, equilibrium real Gross Domestic Product (GDP) would increase by
A. $20,000.
B. $500,000.
C. $400,000.
D. $100,000.
Answer: C
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If the Federal Reserve raises interest rates in an autonomous tightening ________
A) the MP curve shifts up, there is an upward movement along the IS curve, and the AD curve shifts to the left to a lower level of equilibrium output B) the MP curve shifts down, there is a downward movement along the IS curve and the AD curve shifts to the right to a higher level of equilibrium output C) the MP curve shifts up, there is a downward movement along the IS curve and the AD curve shifts to the right to a lower level of equilibrium output D) the MP curve shifts down, there is an upward movement along the IS curve and the AD curve shifts to the left to a higher level of equilibrium output E) none of the above
Inflation: a. can cause a redistribution of income from creditors to borrowers
b. may discourage investment and economic growth. c. can decrease the value of a nation's currency relative to other nations. d. may result in any of the above.
Probably the toughest part of creating a good mitigation strategy for global climate change is that it is
A. an economics problem. B. an issue that lacks public support. C. not certain that global climate change is even occurring. D. an international problem.
You are considering buying a share of stock in XYZ Corporation. At the end of years 1, 2, and 3 the stock will pay you a dividend of $15 . In addition, at the end of the third year you expect to sell the share of stock for $100 . If the interest rate is 3%, how much is the share of XYZ stock worth to you today?
a. $123.14 b. $133.94 c. $137.96 d. $145.00