If the increase in government spending is $500 and the marginal propensity to consume is 0.75, then the change in real gross domestic product will be _____
a. $2,000
b. $500
c. $1,500
d. $1,000
a
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The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers. An increase in the demand for its product led Santa Fe to hire 150 new workers
Santa Fe also plans to expand the capacity of its plant but this project will take 2 years to complete. Which of the following statements is true? A) The long run for Santa Fe is longer than 1 year. B) The wages and benefits paid to the new workers are implicit costs. C) In the short run Santa Fe's variable costs increase but its fixed costs decrease. D) The short run for Santa Fe is 1 year.
The Federal reserves policy regarding announcing its policy decisions has:
A. always been to announce it immediately; that was part of the original Federal Reserve Act of 1913. B. only recently gone to immediate announcement; until 1994 these policy decisions were secret. C. changed so that now the Fed does not release its decisions publicly. D. been to release the decisions immediately since its early failure at preventing the Great Depression.
Nonprofit, or not-for-profit, firms
a. maximize revenue instead of profit b. minimize cost rather than maximize profit c. often pursue goals other than profit maximization d. pursue profit as their main goal despite their name e. have no incentive to produce efficiently
Assume that the reserve requirement for the commercial banks is 25%. If the Federal Reserve Banks buy $3 billion in government securities, the lending ability of the commercial banking system will increase by ________.
A. $12 billion B. $15 billion C. $9 billion D. $4.5 billion