When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 0.75, a $10 billion increase in investment spending will cause the equilibrium output to rise by:
a. $5 billion.
b. $10 billion.
c. $20 billion.
d. $40 billion.
d
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Optimal decisions are made based upon the concept of opportunity cost.
Answer the following statement true (T) or false (F)
In the mid-1980s the natural rate of unemployment in the U.S. was about __________ while at present it is about __________
a. 10%; 2.5% b. 6.5%; 4.5% c. 4.5%; 6.5% d. 6.5%; 6.2% e. 6.5%; 10.0%
Which of the following is not an example of microfinance?
A. A loan to a bakery for a machine to mix dough. B. A loan to an executive for a retirement home. C. A loan to a small farmer for fertilizer. D. A loan to a restaurant owner for an indoor grill.
Production that uses large amounts of human effort rather than machinery is said to be ______.
a. labor inefficient b. capital intensive c. labor intensive d. capital inefficient