Suppose the overall MPC is 0.75 and the marginal propensity to import is 0.25. A $4 billion increase in U.S. exports will lead to a ________ increase in GDP
A) $6 billion B) $8 billion C) $12 billion D) $16 billion
B
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If the economy is in an equilibrium with real GDP less than potential GDP, a fiscal stimulus could move the economy toward potential GDP by simultaneously ________ taxes and ________ government expenditures on goods and services
A) raising; increasing B) raising; decreasing C) cutting; increasing D) cutting; decreasing E) raising; not changing
Trade is based on
A. absolute advantage. B. comparative advantage. C. production costs. D. relative dollar prices.
The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on _____
Fill in the blank(s) with the appropriate word(s).
You are certain that the restaurant industry's normal rate of return is 12%. You would expect a(n) ________ normal rate of return for a soft drink manufacturing industry that people consider much less risky than the restaurant industry.
A. 12% B. risk free (the rate on government bonds) C. above 12% D. less than 12%