Assuming that the government cannot act immediately and the multiplier takes effect, ultimately creating an expansionary gap of $10 billion dollars. To close this gap, government purchases must be:
A. increased by more than $10 billion.
B. increased by $10 billion.
C. decreased by less than $10 billion.
D. decreased by $10 billion.
Answer: C
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The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is
A) efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. B) efficient because the total social benefit from coffee exceed the total social cost. C) inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. D) inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit.
The substitution effect of a(n)
a. price increase works to reduce the quantity of the good demanded b. price increase works to increase the quantity of the good demanded c. price decrease works to reduce the quantity of the good demanded d. income increase works to reduce the quantity of the good demanded e. income decrease works to reduce the quantity of the good demanded
A country has output of $900 billion, consumption of $600 billion, government expenditures of $150 billion and investment of $120 billion. What is its supply of loanable funds?
a. $30 billion b. $90 billion c. $120 billion d. $150 billion
The income elasticity of demand is (mathematically)
A. the percentage change in the portion of a person's budget that they will spend on a good divided by the percentage change in income. B. the percentage change in quantity demanded divided by the percentage change in income. C. the percentage change in income divided by the percentage change in price. D. the percentage change in quantity demanded divided by the percentage change in price.