Entry of new firms into a perfectly competitive market lowers the profits of the existing firms
Indicate whether the statement is true or false
TRUE
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Excess reserves immediately decrease if
A) reserve requirements increase. B) reserve requirements decrease. C) the discount rate increases. D) the discount rate decreases.
Assume an economy that is producing only one product. Output and price data for a three-year period are as follows. Answer the question on the basis of these data. year units of output price per unit 1 20 4 2 25 4 3 30 6 Refer to the above data. If year 2 is chosen as the base year, in years 1 and 3 the price index values, respectively, are:
a) 4 and 6. b) 6 and 4. c) 120 and 100. d) 100 and 150.
In the Keynesian model, an increase in real autonomous spending results in a greater increase in real Gross Domestic Product (GDP) if
A) the marginal propensity to consume (MPC) is lower.
B) the marginal propensity to consume (MPC) is higher.
C) the average propensity to save (APS) is higher.
D) the average propensity to save (APS) is lower.
If the MPC is 0.60 and disposable income increases from $20,000 billion to $22,000 billion, consumption will increase by
A. $1,200 billion. B. $600 billion. C. $2,000 billion. D. $800 billion.