The marginal propensity to consume (MPC) is related to the marginal propensity to save (MPS) by the formula MPC = 1 - MPS.
Answer the following statement true (T) or false (F)
True
Out of any additional disposable income, the MPC and MPS measure the fractions that are spent and saved, respectively.
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
One effect of an unexpected rise in inflation is that wealth is redistributed from:
A. borrowers to lenders. B. lenders to borrowers. C. young people to old people. D. government to firms.
The demand for a product is likely to be more elastic
A. the shorter the time the consumer has to adjust to price changes. B. the lower the price of the good. C. the fewer the number of good substitutes. D. the less the essential nature of the good.
Answer the next question(s) based on the following supply and demand schedules in units per week for a product.PriceQuantity DemandedQuantity Supplied$601004005014034040180280302202202026016010300100The government's introduction of a guaranteed price floor of $50 will result in
A. a shortage of 200 units. B. an unstable market. C. a surplus of 200 units. D. no shortage or surplus.