The main reason barter is extremely inefficient is that:
A. it can have very high transactions costs associated with it.
B. you have to find someone who both has what you want and wants what you have.
C. people and firms have to spend a lot of time looking for mutually agreeable trades.
D. All of these are true.
Answer: D
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Suppose the marginal propensity to consume (MPC) is 0.9 and there is a $3,000 increase in planned investment. Given this information, real GDP will increase by
A) $3,000. B) $2,700. C) $30,000. D) $3,333.
When a firm acquires another,
A) the one acquired gains the most. B) the acquiring firm gains the most. C) both are better off together compared to being separate. D) none of these choices.
The data below describe the economy of Econland:Business and household saving58Government transfers and interest payments12Government purchases of goods and services25Tax collections42Public saving in Econland equals:
A. 5 B. -5 C. 17 D. 16
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher