Consider the above figure. Autonomous consumption, in this scenario, is equal to
A. $80.
B. $60.
C. $30.
D. $40.
Answer: D
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The multiple changes in income and output that results from a change in autonomous expenditure is called the multiplier
Indicate whether the statement is true or false
In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion
If autonomous monetary policy (alone) is used to bring output to $12 trillion, then the figure implies that the real interest rate will be ________ percent, and the inflation rate will be one percent. A) 1.5 B) zero C) one D) 0.5 E) 2.5
Diversification:
A. reduces the likelihood that bad things will happen. B. means you're not likely going to be completely ruined by a single unfortunate event. C. increases the likelihood that bad things will happen. D. None of these statements is true.
Imposing taxes in markets where demand and supply are price inelastic:
A. causes less inefficiency than imposing them in price-elastic markets. B. causes more inefficiency than imposing them in price-elastic markets. C. causes no inefficiency. D. cause the same amount of inefficiency because efficiency is unrelated to market elasticity.