If an economy's MPC is 0.95 and the MPM is 0.15, then an increase in government spending of $1,000 will increase income by
A. $1,000.
B. $4,500.
C. $5,000.
D. $8,000.
Answer: C
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Mexico and the members of OPEC produce crude oil. Realizing that it would be in their best interests to form an agreement on production goals, a meeting is arranged and an informal, verbal agreement is reached. If both Mexico and OPEC abide by the agreement, then OPEC's profit will be $200 million and Mexico's profit will be $100 million. If both Mexico and OPEC cheat on the agreement, then OPEC's profit will be $175 million and Mexico's profit will be $80 million. If only OPEC cheats, then OPEC's profit will be $185 million, and Mexico's profit will be $60 million. If only Mexico cheats, then Mexico's profit will be $110 million, and OPEC's profit will be $150 million. You may find it helpful to fill in the payoff matrix below. src="https://sciemce.com/media/4/ppg__rrr0818190951__f1q386g1.jpg" alt="" style="vertical-align: 0.0px;" height="203" width="377" />Suppose Mexico chooses first, and then OPEC, after seeing Mexico's choice, chooses second. Before Mexico chooses, OPEC tells Mexico that if Mexico cheats on the agreement, then OPEC will also cheat, and if Mexico abides by the agreement, then OPEC will also abide. This is an example of a ________, and the outcome is that ________.
A. credible threat; neither will cheat
B. commitment problem; neither will cheat
C. non-credible threat; both will cheat
D. prisoner's dilemma; both will cheat
In the DMP model, an increase in productivity does not
A) reduce the unemployment rate. B) increase the vacancy rate. C) increase labor market tightness. D) increase the size of the labor force.
What is the difference between a bank that is insolvent and one that is illiquid?
What will be an ideal response?
When foreign investors in Thailand began to realize that Thailand could not maintain its peg to the dollar indefinitely, they began to ________ in Thailand and exchange ________. This change in investment by foreigners is termed capital flight
A) purchase more investments; dollars for baht to purchase these investments B) sell off their investments; the dollars they received for baht C) purchase more investments; baht for dollars to purchase these investments D) sell off their investments; the baht they received for dollars