When government purchases are increased, the amount of the increase in aggregate demand primarily depends on
A. income taxes.
B. the size of the marginal propensity to consume.
C. the average propensity to consume.
D. exchange rates.
Answer: B
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Interlace, Inc produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve
The quantity of soda Interlace Inc will choose to produce is ________ because when this quantity is produced, ________. A) efficient; marginal social benefit exceeds marginal social cost B) efficient; marginal social benefit equals marginal social cost C) not efficient; marginal social benefit exceeds marginal social cost D) not efficient; marginal social benefit equals marginal social cost
When there is a binding price ceiling
A) there is no equilibrium. B) the quantity demanded does not equal the quantity supplied. C) all potential customers are happy because they can buy the good at a lower price. D) producers move production to another country.
Over the 1980s and 1990s, countries with sound fiscal, monetary, and trade policies and strong rule of law combined with large amounts of aid:
A. still failed to grow, indicating new methods for furthering development are needed. B. grew at 1 percent, indicating the necessity of good policy in conjunction with aid. C. saw GDP shrink by 1 percent, indicating corruption and inefficient use of funds is rampant. D. None of these statements is true.
The short-run industry supply curve in a perfectly competitive market is the horizontal sum of each firm's short-run supply curve
a. True b. False