Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.6 generates for every additional $100 of real GDP, there is
A. $40 of additional saving and taxes.
B. $40 of additional consumption spending.
C. $4 of additional saving.
D. $60 of additional real disposable income.
Answer: A
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When the economy is at an above full-employment equilibrium, ________
A) nominal GDP exceeds real GDP B) an inflationary gap exists C) a recessionary gap exists D) real GDP is less than potential GDP
In the above figure, if the price is $10, a profit-maximizing perfectly competitive firm will
A) produce 40 units. B) produce 25 units. C) produce 10 units. D) choose not to produce.
In the United States, health care spending per person based on income per person is ________ the average for most other countries
A) slightly lower than B) comparable to C) significantly lower than D) significantly higher than
A local business sells its product for $40 each in a competitive price-taker market. At its present rate of output, it's marginal cost is $40, average variable cost is $45, and average total cost is $60 . The business should
a. increase output b. reduce output but not to zero c. maintain the present rate of output d. shut down e. raise the price