Refer to Figure 23-4. Potential GDP equals $500 billion. The economy is currently producing GDP1 which is equal to $450 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?
A) -$40 billion B) -$10 billion C) $10 billion D) $40 billion
C
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All of the following can be true about the optimal basket consumed by a consumer, except
a. The basket is on the budget line. b. The person is spending all of their money on the basket. c. The basket is on the highest indifference curve. d. The budget line is tangent to an indifference curve at the optimal basket.
Due to the existence of the FDIC, banks
A) have not changed their behavior even with the existence of insurance. B) are no longer concerned about net worth. C) become more cautious in making loans. D) may make riskier loans knowing that their depositors are insured.
Which of the following is an example of an implicit cost a firm might incur?
A) the opportunity cost to investors of the funds invested in the firm B) the wages paid to employees C) utility payments D) the payment for medical insurance coverage
If the dollar appreciates,
a. imports to the United States become more expensive for foreigners. b. exports from the United States become more expensive for foreigners. c. imports become more expensive for U.S. citizens. d. exports from the United States become cheaper. e. the dollar will exchange for fewer units of a foreign currency.