Suppose the price for one gallon of gasoline rises from $3.50 to $4.00 and the price of one gallon of milk rises from $3.00 to $3.20 . If the CPI rises from 120 to 132, then people likely will buy
a. more gasoline and more milk.
b. more gasoline and fewer milk.
c. less gasoline and more milk.
d. less gasoline and fewer milk.
c
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The value of a model is determined by
A) the usefulness of its predictions in the real world. B) the extent of the profit earned by applying it. C) the realism of its assumptions. D) the model's attention to real world details.
The behavior of the monopolistic firm:
a. maximizes the benefits to consumers, given the resources available to the economy. b. reduces output in order to raise prices in the short-term c. results in excess capacity and inefficiency. d. both b and c
One basic difference between "land" and "capital" resources is that land is:
A. Manufactured while capital is man-made B. Unlimited while capital is limited C. Natural while capital is man-made D. Limited while capital is unlimited
Suppose that real GDP is initially $100 trillion and the government attempts to increase real GDP to $101 trillion. The marginal propensity to consume is 0.75, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. How much increase in real government spending could lead to the desired level of real GDP?
A. $500 billion B. $0 C. $250 billion D. $100 trillion