In a closed economy the marginal propensity to consume is 0.60 and the marginal propensity to invest is 0.10. What is the size of the multiplier?
A) 1.33
B) 2.33
C) 3.33
D) 0.70
C
You might also like to view...
If spending increased by $100, and the GDP increased $400 as a result, the MPC must be:
A. 0.70 B. 4 C. 0.75 D. 2
A monopolist earns $80 million annually and will maintain that level of profit indefinitely, provided no other firm enters the market. If another firm successfully enters the market, the incumbent's profits remain at $80 million the first period but fall to $35 million annually thereafter. The opportunity cost of funds is 20 percent, and profits in each period are realized at the beginning of each period. What is the present value of the firm's current and future earnings if entry occurs?
A. $280 million B. $400 million C. $350 million D. $255 million
If there is currently a surplus of dollars, which of the following would you expect to see in the foreign exchange market?
A) The dollar will appreciate. B) The dollar will depreciate. C) There will be a decrease in the demand for dollars. D) There will be a decrease in the supply of dollars.
If American demand for purchases of Mexican goods has increased, how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically
What will be an ideal response?