A given change in disposable income would have the smallest effect on consumption with which of the following marginal propensities to consume?
a. 0.4
b. 0.6
c. 0.8
d. 0.2
d
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All else equal, compared to small-budget items such as paper towels, the price elasticity of demand for big-ticket items such as refrigerators is ________:
A. equal B. very low C. lower D. higher
According to the interest rate effect, an increase in the price level, if other factors are held constant, will lead to
A. a reduction in total real spending on interest-rate-sensitive goods. B. an outward shift of the aggregate demand curve. C. an increase in the real interest rate. D. an increase in the stock of real wealth held by the public.
David Ricardo used the example of land to demonstrate the concept of rent, as the supply of land is
A. relatively elastic. B. perfectly elastic. C. negatively sloped. D. perfectly inelastic.
A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits. It is currently operating in the elastic range of its MRP curve. If the wage rate increases, its total spending on wages at the new equilibrium will:
A. Be larger B. Be smaller C. Be unchanged D. Change in an undetermined direction