The smaller the MPC:
a. the smaller the fraction of an increase in AD due to an increase in government purchases that is consumption.
b. the greater the fraction of an increase in AD due to an increase in government purchases that is consumption.
c. the greater the change in government purchases required to achieve a given change in AD
d. (a) and (c)
d
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Answer the following statements true (T) or false (F)
1) Generally, the goal of false advertising is to increase a firm's sales and profit. 2) Advertising can easily misinform buyers about the characteristics of an inspection good. 3) Unlike experience goods, the potential to lose repeat sales is not necessarily a deterrent to false advertising a credence good. 4) The impact of truthful advertising on a firm's demand is most relative to firms selling inspection goods rather than credence goods. 5) False advertising is more profitable and more prevalent in communities with a large number of transient consumers.
A way in which government can attempt to solve the problems caused by information asymmetry in the marketplace is:
A. screening. B. building a reputation. C. disclosure laws. D. statistical discrimination.
Suppose a wave of investor and consumer pessimism causes a reduction in spending. If the Federal Reserve chooses to engage in activist stabilization policy, it should
A. decrease the money supply and increase interest rates. B. increase the money supply and decrease interest rates. C. decrease government spending and increase taxes. D. increase government spending and decrease taxes.
If the price elasticity of demand for Harley-Davidson motorcycles is -1.2 and quantity demanded increases by 24%, price must have
A. decreased by 0.05%. B. decreased by 28.8%. C. decreased by 20%. D. increased by 20%.