Refer to the information provided in Table 22.4 below to answer the question(s) that follow.Table 22.4Aggregate Income (Y)Aggregate Consumption (C) 8 10 12 13 20 20 32 31Refer to Table 22.4. Which of the following consumption functions best fits the values in the table?
A. C = 5 + 0.8Y
B. C = 4 + 0.9Y
C. C = 8 + 0.5Y
D. C = 3 + 0.75Y
Answer: D
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Real business cycle theorists are critical of monetarist reduced-form evidence because they believe
A) money is the most important cause of changes in aggregate demand. B) there is reverse causation from the business cycle to money. C) there is reverse causation from money to the business cycle. D) business cycles do not exist.
Briefly explain how scarcity works in the public sector. Give an example that is not in the text.
What will be an ideal response?
If the marginal propensity is 0.75, then a $100 increase in investment will result in a maximum increase in equilibrium real gross domestic product of
A) $40.00 B) $100.00 C) $133.33 D) $400.00 E) $500.00
Models must
A. be totally realistic in every detail. B. be able to yield useable predictions. C. include every relationship that exists. D. be a complete reproduction of the real world.