In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Short-run equilibrium output in this economy equals:
A. 1,440.
B. 1,000.
C. 1,160.
D. 1,280.
Answer: C
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Refer to Figure 7-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?
A) Q0 B) Q1 C) Q2 D) Q2 - Q0
Considering an economy with a current trade surplus and considering only the direct effect of income, an expansionary monetary policy tends to:
A. decrease the exchange rate and decrease the trade surplus. B. increase the exchange rate and decrease the trade surplus. C. decrease the exchange rate and increase the trade surplus. D. increase the exchange rate and increase the trade surplus.
There are 1,000 families in a neighborhood that is affected by noise pollution from a local factory. The noise level is within legal limits, but could be reduced further if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. A committee starts to collect donations to pay for the improvements. Which of the following is most likely to occur?
A. Because each individual contribution is so small and individuals will benefit from the reduction in noise whether they contribute or not, most people will not contribute and the firm will not make the improvements. B. Even if the families raise the $5,000, the firm will not reduce its noise pollution because it is within legal limits. C. The courts will force the firm to spend the $5,000 regardless of whether or not the families contribute the money. D. Because there are relatively few families involved and the individual contribution is so small, all families will voluntarily contribute.
Which of the following is not a problem for the price system allocating resources among different time periods?
a. Interest rates are used for a variety of purposes other than influencing investment. b. The market devotes too much to immediate consumption. c. Our market system leads to lesser real incomes for later generations. d. Our market system despoils irreplaceable natural resources.