Assume the marginal propensity to consume (MPC) is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the:
a. right by $750 billion.
b. left by $750 billion.
c. left by $1,000 billion.
d. right by $1,000 billion.
b
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Gross domestic product understates the total production of final goods and services because of the omission of
A) intermediate goods. B) exports. C) inflation. D) the underground economy.
If the ice cream industry is a competitive price-taker market and all ice cream producers are earning zero economic profit, what will be the impact of an increase in the demand for ice cream?
a. Firms will exit the ice cream industry in the long run since they are earning zero economic profit. b. The firms will now be able to earn long-run economic profit assuming that barriers to entry remain low and new firms can enter the market. c. A shortage of ice cream will develop. d. The price of ice cream will rise initially, inducing the existing firms to expand output and new firms to enter the industry.
What is the present value of $100 5 years from now if the interest rate is 12%?
Fill in the blank(s) with the appropriate word(s).
Answer the next question on the basis of the following consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in billions.AssetsLiabilities & Net WorthReserves$51 Checkable Deposits$140Loans109 Stock Shares130Securities100 Property10?Refer to the above data. The commercial banking system has excess reserves of:
A. $9 billion. B. $5 billion. C. $7 billion. D. $6.1 billion.