If the MPC = 3/4, an increase in government purchases of $40 billion will ultimately lead to:
a. a $160 billion increase in aggregate demand.
b. a $40 billion increase in aggregate demand.
c. a $30 billion increase in aggregate demand.
d. a $30 billion decrease in aggregate demand.
a
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In a market-based economy, the government
A) allocates production. B) enforces property rights. C) encourages insurance risk. D) decides how much to produce.
If price elasticity is less than one, then demand is said to be inelastic
Indicate whether the statement is true or false
Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries
a. Fran and Miller are both investing. b. Fran and Miller are both saving. c. Fran is investing; Miller is saving. d. Fran is saving; Miller is investing.
Which of the following is true in markets where price controls are applied?
A) Price controls distort the incentives faced by both buyers and sellers. B) Price controls clarify the incentives faced by both buyers and sellers. C) Price controls increase the number of exchanges that will occur. D) Price controls are enacted solely with consumers' interests in mind.