Suppose the MPC is 0.8 in Canada and the MPC of Home goods is 0.55. If income increases by $100 million in Canada, then the increase in consumption of domestic goods will be:
a. $25 million.
b. $80 million.
c. $55 million.
d. $35 million.
Answer: c. $55 million.
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Which of the following is a good proxy for the measure of economic prosperity when GDP per capita data is unavailable?
A) Measurements of producer surplus B) Measurements of consumer surplus C) Measurements of balance of payments D) Measurements of urbanization
The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?
A) 6 tons of grain and 18 cars B) 4 tons of grain and 26 cars C) 2 tons of grain and 27 cars D) 7 tons of grain and 10 cars
Data on productivity gains in the 1990s in the United States strongly suggest that a significant share of those gains was attributable to:
A) improvements in education and training. B) improvements in information technology. C) substantial reductions in labor costs. D) increased demand for goods and services.
When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases.
a. true b. false