Given a consumption function of C = $25 + 0.75YD, the average propensity to consume equals 1 when disposable income equals
A. $75.
B. $25.
C. $100.
D. -$300.
Answer: C
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In a country with floating exchange rates and high capital mobility, an increase in government spending will be
A) less effective than with low capital mobility. B) highly effective. C) not effective at all. D) harmful to the growth of real incomes.
Assume that an oligopolist has a kinked demand curve. Suppose that the marginal cost curve passes through the gap in the marginal revenue curve. This means price and output will be shown by a point:
a. above the curve. b. below the curve. c. at the kink d. on the upper part of the curve. e. on the lower part of the curve.
According to the General Equilibrium Model, an economically efficient allocation of resources occurs when
A. no welfare-improving trades can be made. B. the producer's MRT = the consumer's MRS. C. all consumers have the same MRS. D. All of these exist.
Foreign investment can be economically beneficial for all of the following reasons except:
A. increases the GDP of the investing country by providing it with ways to earn higher returns on its capital. B. increases the GDP of the host country by giving it access to additional resources. C. makes the world a more efficient place by moving capital from places with low returns to places with high returns. D. it always leads to a higher interest rate.