Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is .25. Now suppose government collects taxes of $50 and spends the entire amount. As a result:
A. the equilibrium level of real income and the price level will both remain unchanged.
B. the equilibrium level of income will remain unchanged.
C. the equilibrium level of income will rise to $420.
D. the equilibrium level of income will rise to $430.
D. the equilibrium level of income will rise to $430.
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________ is the ability to move to a different part of the income distribution
Fill in the blank(s) with correct word
You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:
A. is profit maximizing but not cost minimizing. B. is cost minimizing. C. should use less L and more K to cost minimize. D. should use more L and less K to cost minimize.
If the Federal Reserve Bank wants to lower the supply of money, it sells government bonds from its portfolio to the public in the nation’s bond markets.
Answer the following statement true (T) or false (F)
Physical capital is distinguished from human capital because
A. human capital refers only to day laborers. B. physical capital refers to trained people. C. physical capital refers to equipment and machinery, whereas human capital refers to trained people. D. physical capital refers to trained people, whereas human capital refers to equipment and machinery.