Suppose the MPC is 0.8 in Canada and the MPC h is 0.55. If income increases by $100 million in Canada, then the increase in consumption of foreign goods will be:
a. $35 million.
b. $25 million.
c. $80 million.
d. $100 million.
Answer: b. $25 million.
You might also like to view...
When accounting profits are positive, economic profits could be:
A. positive. B. negative. C. zero. D. All of these are possible.
A society is saving lives (productively) efficiently if
a. there are no unemployed resources in the health care sector b. there are no unemployed resources anywhere in the economy c. there is no way to save more lives d. there is no way to save more lives without sacrificing some other goods or services e. the opportunity cost of saving one more life is zero
In order to practice price discrimination, a firm must:
A. avoid detection by the government. B. be able to divide consumers into groups with different demands for their product. C. have a homogeneous product. D. advertise their product.
Even when people know the purchasing power of the currency is declining, they continue to use the currency because
A. its value is still predictable. B. it still has some intrinsic value. C. the return of holding currency is always higher than the returns of all other assets. D. they have no other choice.