When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 0.75, a $10 billion increase in investment spending will cause the equilibrium output to rise by:
A. $5 billion.
B. $10 billion.
C. $20 billion.
D. $40 billion.
Answer: D
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The highest unemployment rate in U.S. history was about
A) 10.2 percent in 2009. B) 5.9 percent in 1972. C) 10 percent in 1982. D) 25 percent in 1933. E) 52 percent in 1939.
If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase
Indicate whether the statement is true or false
The above figure shows a graph of the market for pizzas in a large town. At a price of $7, there will be
A) excess demand. B) excess supply. C) equilibrium. D) zero demand.
According to supply-side economists, as tax rates are increased, labor supply should decrease. This implies that the substitution effect of a wage change ________ the income effect of a wage change.
A. is equal to B. has no impact on C. is greater than D. is less than