If the MPC = 0.75, then the spending multiplier must be:
A. 3
B. 4
C. 5
D. 1.25
B. 4
You might also like to view...
Suppose the AC curve is U-shaped. Then an increase in a recurring fixed cost will cause the AC curve to shift up, with its lowest point shifting to the right.
Answer the following statement true (T) or false (F)
Vertical contracts between manufacturers and retailers often aim to
a. Incentivize the manufacturers to undertake costly activities, which they otherwise may not realize the full benefits of on their own b. Reward the manufacturers for undertaking the risk inherent in introducing a new product c. Serve as a "signal" of the manufacturer's belief of the likely success of his product d. All of the above
For a college student who wishes to calculate the true costs of going to college, the costs of room and board
a. should be counted in full, regardless of the costs of eating and sleeping elsewhere. b. should be counted only to the extent that they are more expensive at college than elsewhere. c. usually exceed the opportunity cost of going to college. d. plus the cost of tuition, equals the opportunity cost of going to college.
Education is heavily subsidized through public schools and government scholarships. This subsidization of education reflects the fact that
a. a negative externality requires a subsidy to move the market equilibrium closer to the social optimum. b. the social cost of education exceeds the private cost of education. c. the social value of education exceeds the private value of education. d. the market-equilibrium quantity of education exceeds the optimal quantity of education.