If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:
A. increase from 4 to 5.
B. decrease from 5 to 4.
C. increase from 0.2 to 0.25.
D. decrease from 1.25 to 1.2.
A. increase from 4 to 5.
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Which of the following would cause an outward shift of the production possibilities frontier?
a. An increase in opportunity costs b. A reduction in the size of the labor force c. A reduction in inefficiency d. A change in the combination of goods produced e. An improvement in technology
The actual government budget surplus ________ be used to determine the effectiveness of discretionary fiscal policy actions because ________
A) cannot; it excludes non-discretionary spending changes B) can; it includes non-discretionary spending changes C) cannot; it includes non-discretionary spending changes D) can; it excludes automatic stabilization expenditures
The income elasticity of demand for agricultural products is typically
a. less than zero. b. greater than zero, but less than one. c. greater than one. d. infinity.
The proportion of deposits that banks are legally required to deposit with the central bank are called:
a. discount requirements b. deposit requirements c. reserve requirements d. monetary requirements