A decrease in autonomous investment of $100 million that occurs when the marginal propensity to save (MPS) equals 0.25 will lead to a decrease in real Gross Domestic Product (GDP) of
A. $40 million.
B. $400 million.
C. $25 mllion.
D. $250 million.
Answer: B
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The unemployment rate can increase when
A) the proportion of 18-22 year olds that go to college increases. B) the number of unemployed workers increases. C) the number of job finders increases. D) the size of the military increases.
If the Federal Reserve wanted to change the money supply in the economy, it would be least likely to
A) change the federal funds rate. B) sell bonds on the open market. C) change the level of reserves required to be held by banks. D) buy bonds on the open market.
The Roy model concerns
A. the cost-benefit analysis of layoffs or quits. B. specific on-the-job training. C. the skill-selection associated with immigration flows. D. the age-earnings profile. E. general training.
Microeconomics is the study of aggregate behavior in the economy.
Answer the following statement true (T) or false (F)