Suppose that the marginal propensity to consume? (MPC) is .8 and there is an increase in investment spending of? $100,000. As a? result, equilibrium real Gross Domestic Product? (GDP) would increase by
A. ?$800,000.
B. ?$100,000.
C. ?$500,000.
D. ?$20,000.
Ans: C. ?$500,000.
You might also like to view...
Assume that the medical screening industry is perfectly competitive. Consider a typical firm that is making short-run losses
Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health. How will this affect a typical firm that remains in the industry? A) The firm's marginal revenue curve and average cost curve shift upwards in response to the increase in market price and advertising expenditure. The firm increases output until it starts breaking even. B) The marginal revenue curve shifts upwards, the firm's output increases along its marginal cost curve, it expands production until it breaks even. C) The firm's supply curve shifts right and its marginal revenue curve shifts upwards as the market price rises and ultimately the firm starts making profits. D) The marginal revenue curve shifts upwards, the firm's output increases along its marginal cost curve, it expands production and eventually starts making profits.
The general rule governing the hiring of workers is to:
A. maximize the marginal product of labor. B. equate marginal labor costs to marginal labor benefits. C. equate total labor costs to total labor benefits. D. minimize average labor costs.
Refer to the above supply and demand graph. In the graph, point A is the current equilibrium level of output of this product and point B is the optimal level of output from society's perspective. This figure indicates that there is(are):
A. positive externalities created in the production of this product. B. an underallocation of resources to product production. C. a surplus of the good produced. D. negative externalities created in the production of this product.
If Panera Bread's "clean food" strategy succeeds and customers are willing to pay higher prices for their menu items, the company will
A) no longer be monopolistically competitive. B) continue to earn substantial economic profits in the long run. C) eventually suffer economic losses, as do all fast-casual restaurants. D) likely attract competitors that offer the same kind of food, and all else equal, eventually economic profits will be competed away.