The fraction of an increase in income that is saved is referred to as the _____
a. marginal propensity to save
b. average propensity to save
c. marginal propensity to consume
d. average propensity to consume
e. saving-consumption ratio
a
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Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that
A) Labor costs are higher for surfboard producers in New Zealand than in Australia. B) Australia also has an absolute advantage in producing surfboards relative to New Zealand. C) Australia has a lower opportunity cost of producing surfboards relative to New Zealand. D) New Zealand has an absolute disadvantage in producing surfboards relative to Australia.
How do the marginal propensity to consume, the marginal propensity to import, and the income tax rate influence the multiplier?
What will be an ideal response?
A firm is producing a joint product, Product A and Product B, with variable proportions. At its current production levels, the marginal benefit of producing Product A is $4 and the marginal cost is $2 and the marginal benefit of producing Product B is $4 and the marginal cost is $6. To maximize profits, the managers of the firm should produce ________ of Product A and ________ of Product B.
A) more; less B) less; more C) less; less D) more; more
Caroline earns more than John. Under a new tax system, some of the taxes paid by Caroline would go to John. A libertarian would
a. support the system because an extra dollar earned by Caroline would be worth less to her than an extra dollar given to John. b. oppose the system if it redistributed income in the presence of equal opportunity. c. oppose the system because an extra dollar earned by Caroline would be worth more to her than an extra dollar given to John. d. support the system if it maximized the well-being of the poorest member of society.