The formula to compute the spending multiplier is:
a. 1 / (MPC + MPS).
b. 1 / (1 ? MPC).
c. 1 / (1 ? MPS).
d. 1 / (C + I).
b
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A decrease in people's disposable income
A) increases saving and decrease consumption. B) increases saving. C) increases investment demand. D) decreases saving. E) increases consumption.
In the Great Depression, the financial sector collapsed, as
A) banks engaged in ruinous competition. B) the stock market boomed, so people withdrew most of their funds from banks and invested heavily in stocks. C) the bond market boomed, so people withdrew most of their funds from banks and invested heavily in bonds. D) many banks closed.
When people believe murder is a more common cause of death than stomach cancer is, it illustrates the:
A. Confirmation bias B. Framing effect C. Hindsight bias D. Availability heuristic
Economics deals primarily with the concept of _______
A. scarcity. B. poverty. C. change. D. power.