Suppose the marginal propensity to consume (MPC) is 0.9 and there is a $3,000 increase in planned investment. Given this information, real GDP will increase by
A) $3,000.
B) $2,700.
C) $30,000.
D) $3,333.
Answer: C) $30,000.
You might also like to view...
When changes in taxes and government purchases occur in the economy without explicit action by Congress, such changes are referred to as
A. discretionary fiscal policy. B. automatic stabilizers. C. cyclical stabilization. D. implicit stabilization.
A free rider:
A. contributes little or nothing to a public good while benefiting from others' contributions. B. prevents a market failure. C. contributes little or nothing to a public good, but also does not benefit from others' contributions. D. creates both positive and negative externalities.
During the Great Depression, the money supply fell 28%. During that same time, the monetary base ____ and the currency-to-deposit ratio and reserve-to-deposit ratios both _____
a. rose; fell b. rose; rose c. fell; rose d. fell; fell
If demand increases in a perfectly competitive market, then in the short run supply will:
A. either increase or decrease. B. increase. C. not change. D. decrease.