If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:
A. increase from 4 to 5.
B. decrease from 1.25 to 1.2.
C. decrease from 5 to 4.
D. increase from 0.2 to 0.25.
Answer: A
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Small-denomination time deposits refer to certificates of deposit with a denomination of less than
A) $1,000. B) $10,000. C) $100,000. D) $1,000,000.
Sandy's current consumer surplus for candy is 20. Candy is an inferior good for her. When her income increases and the price of candy remains unchanged, her consumer surplus will
A) increase. B) decrease. C) remain the same. D) Not enough information.
Refer to Figure 2.1. At point A, demand is:
A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic.
When the government bans a good:
A. the cost of breaking the ban needs to be sufficiently low in order to be effective. B. it doesn’t need to change the trade-offs consumers face. C. it will only be effective if it can be easily enforced. D. it should get approval from the community before exacting the ban to be more effective.