What is the value of the spending multiplier when MPC = 0.85 and MPI = 0.3?
a. 1.82
b. 0.85
c. 2.22
d. 1.18
e. 2.50
c
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A vertical merger, like the merger of Seagate and Dell, would be attractive
a. only to Dell because it then avoids paying monopoly prices to Seagate. b. only to Seagate because it can then obtain two monopoly rents. c. to both Seagate and Dell but not to consumers who would find no difference in their welfare. d. to Seagate, Dell and consumers, all of whom would stand to benefit in some way.
A minimum wage law prohibits employers from paying workers less than a specified hourly wage. If the minimum wage is above the equilibrium wage:
A. there will be an excess demand for labor. B. there will be an excess supply of labor. C. employment levels will not fall. D. it creates a price ceiling.
International trade is restricted because
A) there is an uneven distribution of benefits and costs of free trade. B) free trade creates an inefficient use of resources. C) free trade leads to higher costs. D) free trade stifles diversity and stability.
Financial innovations may be expected to cause a decline in ________
A) financial frictions B) the credit spread C) the real interest rate on investments D) all of the above E) none of the above