What is a multiplier? How does the multiplier effect occur?
The multiplier is the ratio of the change in equilibrium GDP (Y) divided by the original change in spending that causes the change in GDP.
The multiplier effect occurs because one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on.
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By selecting a bundle where MRS = MRT, the consumer is
A) achieving a corner solution. B) reaching the highest possible indifference curve she can afford. C) not behaving in an optimal way. D) All of the above.
Suppose that at current consumption levels an individual's marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2 . Then the MRS (of soft drinks for hot dogs)—that is, the number of hot dogs the individual is willing to give up to get one more soft drink is
a. 5 b. 2 c. 1/2 d. 1/5
In a proportional tax system each individual would pay the same percentage of his or her income in taxes
a. True b. False Indicate whether the statement is true or false
Average revenue for a monopoly is the total revenue divided by the quantity produced
a. True b. False Indicate whether the statement is true or false