In Figure 11.3, if the MPS is 0.25 and the distance between points C0 and C1 is 200, then the distance between points y0 and y1 must be
A) 50. B) 200. C) 400. D) 800.
D
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Crowding out can occur when a government budget ________ raises the real interest rate and the equilibrium quantity of investment ________
A) surplus; increases B) deficit; increases C) surplus; decreases D) surplus; does not change E) deficit; decreases
According to the classical model, more saving leads to more investment because
A) the people who save are the same people who invest. B) the interest rate adjusts to keep investment equal to saving. C) saving and investment are two sides of the same activity. D) the interest rate is set by the federal government.
The idea of the invisible hand was introduced by
A. Wassily Leontief. B. Adam Smith. C. Thomas Jefferson. D. Mountifort Longfield.
Suppose that in some tax year you earned a nominal interest rate of 6 percent. During the time you held these funds inflation was 1 percent. You compute that you made a real after-tax interest rate of 3 percent. What was your tax rate?
a. 40 percent. b. 33.3 percent. c. 25 percent. d. 50 percent.