Suppose we have the following information about a furniture maker: furniture sales $100M, wood purchases $60M, wages $25M, tax on profits $5M, profits $10M. What is the contribution to GDP of this company using the product approach?
A) $100M.
B) $60M.
C) $40M.
D) $15M.
C
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Assuming a simple Keynesian multiplier, and given an increase in planned investment of $100 billion, the effect on total output will be greater than $100 billion only if the
A) MPS is greater than zero. B) MPC is zero. C) MPS is less than zero. D) MPC is greater than one.
Consider an apple orchard owner deciding how to incentivize his fruit pickers. He pays per pound harvested but adjusts the compensation rate higher during poor harvest seasons. As a consequence
a. The compensation rate should be fixed at all times b. The pickers might try to game the system by discouraging others from harvesting too much c. The pickers would claim good harvests in order to be paid higher piece rates even during poor harvest seasons d. None of the above
The more substitutes for a good, the more elastic its demand
Indicate whether the statement is true or false
Health insurance companies impose deductibles on policies and copayments on claims to
A) increase prices. B) increase sales. C) reduce the moral hazard problem. D) increase asymmetric information.