Assume the marginal propensity to consume is 0.8. If consumer spending rises by $20 billion, then total income through the multiplier effect will:
a. Will not change
b. Decrease by $100 billion
c. Increase by $100 billion
d. Increase by $10 billion
c. Increase by $100 billion
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As a result of losing his job, Uncle Roy dropped his cable TV service and instead bought a new iPod. For Uncle Roy,
A) cable is an inferior good and the iPod is a normal good. B) cable is a normal good and the iPod is an inferior good. C) both cable and the iPod are normal goods. D) both cable and the iPod are inferior goods. E) cable and the iPod are complementary goods.
The law of diminishing marginal product holds so long as the input is not a Giffen good.
Answer the following statement true (T) or false (F)
Water, when it is not tradeable among current and potential users, is often kept that way
a. by governments demanding tight control over who gets the water. b. by nature, as water cannot be easily moved from place to place in large quantities. c. to protect fish and other wildlife, rather than for any other reason. d. by monopoly owners in the private sector.
Which of the following statements is correct?
A. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and directly with potential output. B. The long-run real interest rate varies inversely with changes in non-interest sensitive components of aggregate demand and inversely with potential output. C. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and inversely with potential output. D. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and does not vary with potential output.