The nation’s disposable income increases by $400 billion and, as a result, consumer spending increases by $320 billion. Therefore, the MPC equals
A. 0.16.
B. 0.20.
C. 0.60.
D. 0.80.
E. 0.96.
Answer: D
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The demand curves for gold in New York and Zurich can both be represented by a line with negative slope, -b. When the price is zero the demand for gold is x ounces higher in New York than in Zurich
At the current price of gold the price elasticity of demand for gold in New York and Zurich is -3 and -4 respectively. The value of x equals A) a quarter of the current demand for gold in New York B) a third of the current demand for gold in New York C) a half of the current demand for gold in New York D) three-quarters of the current demand for gold in New York E) none of the above
A contractionary fiscal policy shifts the aggregate demand curve of an economy to the left
a. True b. False Indicate whether the statement is true or false
Suppose a U.S. government program subsidizes the production of domestic sugar producers and places a tariff (tax) on the importation of sugar from other countries. This program
a. helps the producers of sugar, but increase the opportunity cost of obtaining it. b. promotes the production of goods that consumers value highly relative to cost. c. creates wealth, because the government is providing the subsidies and imposing the tariffs. d. will reduce the opportunity cost of obtaining sugar and therefore lead to lower sugar prices.
The tendency for marginal utility to decline as consumption increases beyond some point is called:
A. utility maximization. B. the rational spending rule. C. the law of demand. D. the law of diminishing marginal utility.