If the government wishes to increase GDP by $1,200b, and the MPC is 0.8, it should:

A. increase its spending by $240b.
B. decrease its spending by $240b.
C. increase its spending by $960b.
D. decrease its spending by $960b.


A. increase its spending by $240b.

Economics

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Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

A. Lewis should specialize in pies, and Cathy should specialize in cakes. B. Cathy should specialize in pies, and Lewis should specialize in cakes. C. Cathy should specialize in both pies and cakes. D. There are no gains from specialization and trade.

Economics

Which of the following is definitely NOT an example of a natural monopoly?

A) local water distribution companies B) urban rail services C) local electric power and gas distribution companies D) urban retail stores

Economics

The investors who bought mortgage-backed securities just before the housing bubble burst:

A. were not concerned about the original mortgage. B. knew exactly what they were buying. C. were not confident in the rising home value underlying each mortgage. D. were all very comfortable assuming high-risk assets.

Economics

An oligopolist producing where MR > MC should lower its price and increase output to maximize its profits.

Answer the following statement true (T) or false (F)

Economics