In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.Consumers expect that the price of X will rise sharply in the future. At the same time, technology used in producing X improves. When both of these occur, what outcome will occur with greatest certainty?
A. increase D, increase S, increase P, and increase Q.
B. increase D, decrease S, increase P, and effect on Q uncertain.
C. increase D, increase S, decrease P, and increase Q.
D. increase D, increase S, increase Q, and effect on P uncertain.
Answer: D
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If net taxes fall by $80 billion, we would expect
A) the government deficit to fall by $80 billion. B) household saving to rise by $80 billion. C) household saving to fall by more than $80 billion. D) household saving to rise by less than $80 billion.
Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to rise and monetary base to remain the same. b. Demand for real goods and services to remain the same and M2 money supply to remain the same. c. Demand for real goods and services to rise and M2 money multiplier to rise. d. Demand for real goods and services to remain the same and M2 money supply to rise.
The catch-up effect refers to the idea that
a. saving will always catch-up with investment spending. b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor. c. population eventually catches-up with increased output. d. if investment spending is low, increased saving will help investment to "catch-up."
If disposable income is $400 billion, autonomous consumption is $60 billion, and MPC is 0.8, what is the level of saving?
A. $20 billion. B. $210 billion. C. $380 billion. D. $590 billion.