Which of the following changes in taxes would lead to the greatest increase in consumption?
a. a $20,000 decrease in taxes, if MPC equals 0.5
b. a $12,000 decrease in taxes, if MPC equals 0.75
c. a $15,000 decrease in taxes, if MPC equals 0.6
d. a $30,000 decrease in taxes, if MPC equals 0.25
a
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The supply of money curve is
A) vertical because the quantity of money is fixed at any one moment. B) horizontal because interest rates are fixed at any one moment. C) horizontal because the Fed controls the quantity of money supplied. D) upward sloping, showing the influence of the interest rate. E) downward sloping, showing the negative influence of the interest rate.
In the simple circular flow model, households and firms interact with each other in which two broad markets?
a. service and education b. real estate and insurance c. factor and product d. stock and bond
The practice of a firm setting a price so low that all firms incur losses is called
a. a tournament. b. predatory pricing. c. a buy-out strategy. d. a contestable market.
The ________ shows the relationship between the price level and quantity of real GDP demanded
A) 45-degree line B) aggregate demand curve C) consumer price index D) aggregate expenditure line