Assume the marginal propensity to consume is 0.8. If consumer spending increases by $20 billion, then real GDP will:
A. Increase by $100 billion
B. Decrease by $100 billion
C. Increase by $16 billion
D. Will not change
A. Increase by $100 billion
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After NAFTA was signed, the United States allowed more tomatoes to be imported from Mexico. What happened to the price of tomatoes in the United States when the United States allowed more tomatoes to be imported?
What will be an ideal response?
What is the difference between an inflation-indexed Treasury bond, and a Treasury bond that is not indexed?
A. An inflation-indexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. B. A nonindexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not. C. An inflation-indexed Treasury bond can only be purchased directly from the Federal Reserve, while a nonindexed Treasury can be purchased through a broker. D. An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate of return, while a nonindexed Treasury bond does not.
Why is the time lag for making fiscal policy changes longer than for making monetary policy changes?
Which is NOT true about the use of economic models?
A) Economic models are simplified representations of the real world. B) Economists always use experiments in science laboratories to test their theories. C) Economists use what has already happened in the real world to test their theories. D) Economists are employed to explain economic phenomena but are never used to predict what might happen next.