If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase, then
A) saving at every level of disposable income increases.
B) the break-even disposable income decreases.
C) the break-even disposable income increases.
D) saving is unaffected.
Answer: C) the break-even disposable income increases.
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If there are 48 million people in a country's labor force, and the number of potential adult workers in the country is 80 million, the labor force participation rate in the economy is:
A) 90 percent. B) 60 percent. C) 48 percent. D) 80 percent.
Traditional Keynesian economists believed that:
a. the aggregate supply curve is a vertical line at a fixed level of prices. b. an increase in aggregate demand would cause a change in the price level. c. the government should take an active role in the economy to restore equilibrium. d. changes in aggregate demand does not determine equilibrium real GDP. e. the private sector is not an important source for shifts in aggregate demand.
Suppose the interest parity condition holds. Also assume that the one-year interest rate in the United States is 5% and that the one-year interest rate in Canada is 6%. What does this imply about the current versus future expected exchange rate (for the U.S. and Canadian dollars)? Explain
What will be an ideal response?
A firm that shuts down in the short run experiences losses equal to
A. total fixed costs. B. zero. C. total variable costs. D. total marginal costs.