If the marginal propensity to consume (MPC) is 0.75, a $50 decrease in government spending, other things being equal, would cause equilibrium real GDP to:
A. increase by $50.
B. decrease by $50.
C. increase by $200.
D. decrease by $200.
Answer: D
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Objects in and of themselves have no costs. Lunches are an object, so they presumably have no cost. Yet we often hear economists say, "There is no such thing as a free lunch." Are economists being inconsistent?
A) It is impossible to tell. B) Yes, if the statement implies lunch actually has a cost. C) No, if the statement implies the decision to offer lunches free of charge entails the sacrifice of scarce resources, which could have served other useful purposes. D) Both B and C are true.
If a perfectly competitive firm decides to shut down in the short run, its loss will equal its
A) minimum average variable cost, AVC. B) total variable cost, TVC. C) total fixed cost, TFC. D) average total cost, ATC.
Local property taxes are used to provide
A. education. B. fire protection. C. libraries. D. all of these answer options are correct.
Which of the following conditions distinguishes perfect competition from monopolistic competition?
a. the number of sellers b. freedom of entry and exit c. homogeneity of the product d. none of the above