To close an inflationary expenditure gap of $20 billion in an economy with a marginal propensity to consume of 0.8, it would be necessary to
A. decrease the aggregate expenditures schedule by $4 billion.
B. decrease the aggregate expenditures schedule by $20 billion.
C. increase the aggregate expenditures schedule by $4 billion.
D. increase the aggregate expenditures schedule by $20 billion.
Answer: B
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The law of diminishing marginal utility states that
A) the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. B) when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant. C) eventually total utility falls as more of a good is consumed, other things constant. D) the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant.
Parity pricing and target pricing differ in that
a. consumers pay a higher than equilibrium price under parity pricing and a lower than equilibrium price under target pricing b. consumers pay a higher than equilibrium price under target pricing and a lower than equilibrium price under parity pricing c. parity pricing generates an excess supply of farm goods while target pricing generates an excess demand d. parity pricing generates an excess demand for farm goods while target pricing generates an excess supply e. under parity pricing, consumer demand determines price while under target pricing, market supply determines the price
A monopoly restricts output and charges a higher price than other types of firms
a. True b. False Indicate whether the statement is true or false
Other things the same, a country could move from having a trade deficit to having a trade surplus if either
a. saving rose or domestic investment rose. b. saving rose or domestic investment fell. c. saving fell or domestic investment rose. d. saving fell or domestic investment fell.