In the Keynesian model, an increase in real autonomous spending results in a greater increase in real Gross Domestic Product (GDP) if
A) the marginal propensity to consume (MPC) is lower.
B) the marginal propensity to consume (MPC) is higher.
C) the average propensity to save (APS) is higher.
D) the average propensity to save (APS) is lower.
Answer: B) the marginal propensity to consume (MPC) is higher.
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Monetary policy refers to the actions taken by the Treasury Department to set the level of the money supply
Indicate whether the statement is true or false
Christy is a telemarketer. She estimates that this summer, she has a 0.2 probability of earning $10,000, a 0.5 probability of earning $5,000, and a 0.3 probability of earning only $1,000. What is Christy's expected income?
A) $7,256 B) $5,333 C) $4,800 D) $4,000
If, in a perfectly competitive industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then
A) new firms are attracted to the industry. B) existing firms will exit the industry. C) market supply will remain constant. D) firms are breaking even.
When economists say that private investment is "autonomous," they mean that it:
A. will never change. B. is not dependent on the current level of disposable income. C. is determined by the "animal spirits" of business decision makers. D. is determined by the level of saving.