A . What is the income multiplier? b. How will the income multiplier change if the marginal propensity to save increases? Explain
a . The income multiplier measures the multiple by which income changes as a result of a change in
aggregate expenditure.
b. It will decrease, because an increase in MPS means that the MPC must fall. Since the income
multiplier is 1/1-MPC, a fall in MPC decreases the value of the multiplier. As a result, a change in
aggregate expenditure will have a smaller effect on national income.
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Actions by the Second Bank of the United States:
a. reduced the discount rate on state bank notes. b. increased the discount rate on state bank notes. c. created inflation. d. effectively ended the use of state bank notes.
As a result of a quota, both consumers' surplus and producers' surplus fall
Indicate whether the statement is true or false
Within a country, a tariff mainly causes a redistribution of well-being between the domestic producers and the government.
Answer the following statement true (T) or false (F)
Answer the following statement true (T) or false (F)
1) Homogeneous oligopolists tend to advertise more than do differentiated oligopolists. 2) Oligopolists use limit pricing to maximize short-run profits. 3) Both collusive and noncollusive oligopoly models suggest that price changes will be relatively infrequent in these types of industries. 4) Collusion among firms always involves formal agreements. 5) Firms are more likely to collude when the economy is in a recession.