If households' income taxes are cut, how are households likely to respond?
a. A decrease in consumption expenditure
b. A decrease in saving
c. Push the economy into recession
d. An increase in consumption expenditure
Answer: d. An increase in consumption expenditure
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An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society
a. True b. False Indicate whether the statement is true or false
How does a government-regulated price floor set above the equilibrium price affect the quantity of the good demanded and supplied in the market?
What will be an ideal response?
The fraction of each additional dollar of disposable income not spent on consumption is referred to as:
A. The money multiplier. B. The MPC. C. The MPS. D. Fiscal stimulus.
Refer to the following graph.
The maximum amount of good B can be consumed in this economy with international trade is
A. Q units. B. F units. C. P units. D. G units.