A growing government budget deficit and national debt reduces economic growth because
A) it insures that future generations will have to pay the debt.
B) it reduces public investment.
C) it reduces household saving.
D) it diverts private savings from the financing of private investment.
D
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If the marginal propensity to save is 0.20, then the value of the tax multiplier is
A) -5. B) -4. C) 5. D) 1.2.
Under a fixed exchange rate regime, the central bank must act to keep
A) P = P. B) the real exchange rate fixed. C) i = i. D) E = 1. E) none of the above
The theory that firms will be slow to change their products' prices in response to changes in demand because there are costs to changing prices is called
A. cost-benefit theory. B. menu cost theory. C. transactions cost theory. D. gift exchange theory.
Refer to the information provided in Figure 6.10 below to answer the question(s) that follow.
Figure 6.10Refer to Figure 6.10. Kyle would increase his consumption of turkey sandwiches from 5 to 7 per week if their price fell from $8 to $6. This illustrates the idea of
A. consumer surplus. B. cross-price elasticity of demand. C. technical efficiency. D. the law of diminishing marginal utility.