Which of the following correctly describes the marginal propensity to consume?
a. The change in savings divided by the change in consumption.
b. The change in consumption spending divided by the change in disposable income.
c. The change in real disposable income divided by the change in consumption.
d. The change in savings divided by the change in disposable income.
b
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In the circular flow, how are the "value of production," "income," and "expenditures" related?
A) They have no relationship to each other. B) Once tax payments are subtracted at each stage, they are equal. C) Expenditures on GDP equals the value of production which equals income. D) Once net exports of goods and services are subtracted from GDP, all three are equal. E) Value of production always equals income, but expenditures is smaller because households save some of their income and do not spend it.
If the Fed wished to eliminate an inflationary gap, which of the following would be an appropriate policy?
What will be an ideal response?
The real deficit is the nominal deficit adjusted for inflation's effect on existing debt.
Answer the following statement true (T) or false (F)
Consider a Stackelberg duopoly with the following inverse demand function: P = 100 ? 2Q1 ? 2Q2. The firms' marginal costs are identical and are given by MCi = 2. Based on this information, the Stackelberg follower's reaction function is:
A. QF = 24.5 ? 0.5QL. B. QF = 24.5 ? QL. C. QF = 49 ? 0.25QF. D. QF = 24.5 ? 0.25QL.