In the traditional Keynesian model, a tax decrease
A. causes a leftward movement along the C + I + G + X line.
B. causes the C + I + G + X line to shift upward.
C. causes the C + I + G + X line to shift downward.
D. causes a rightward movement along the C + I + G + X line.
Answer: B
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Suppose that in Colombia one unit of labor can produce either 8 tons of papayas or 2 tons of bananas and in Brazil one unit of labor can produce either 4 tons of papayas or 1 ton of bananas. Given this information, which of the following statements is true?
A. Columbia has a comparative advantage in producing papayas but not bananas. B. These countries would increase combined consumption if they specialized and traded. C. These countries cannot gain from trading. D. Columbia has a comparative advantage in producing papayas and bananas.
Suppose the annual growth rate of GDP in Belize is 3.5 percent. In 20 years, GDP in Belize will double
A) 1 time. B) 1.5 times. C) 3.5 times. D) 7 times.
If the price of a good increases, then in the market for the type of labor needed to produce this good,
A. employment will decrease. B. the labor supply will increase. C. the marginal product (MP) of labor will increase. D. the marginal revenue product (MRP) of labor will increase.
If the marginal propensity to consume (MPC) is 0.60, what is the spending multiplier?
A. 0.4. B. 0.6. C. 2.5. D. 6.0.