If potatoes are inferior goods, which of the following will increase the demand for these goods?
a. Increase in the price of a complement
b. Decrease in income
c. Decrease in the price of a substitute
d. Increase in income
b
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Which of the following is a true statement about the multiplier?
A) The multiplier is a value between zero and one. B) The smaller the MPC, the larger the multiplier. C) The multiplier rises as the MPC rises. D) The multiplier effect does not occur when autonomous expenditure decreases.
Higher protection raises the overall level of employment
Indicate whether the statement is true or false
In the past 100 years the U.S. economy has primarily experienced
a. deflation. b. unemployment. c. inflation. d. depression.
Suppose that an expansionary gap of $500 billion exists in the economy, and the marginal propensity to consume is 0.8 . Which of the following correctly describes a discretionary fiscal policy that will be just sufficient to close this expansionary gap?
a. Increase government spending by $250 billion. b. Increase taxes by $125 billion. c. Decrease government spending by $250 billion. d. Decrease taxes by $125 billion.