An economy has no international trade and no income taxes. If lump-sum taxes increase by $40 billion and the marginal propensity to consume was equal to 0.7, then in the short run while prices are constant, real GDP
A) decreases by $93 billion. B) increases by $28 billion.
C) increases by $12 billion. D) decreases by $28 billion.
A) decreases by $93 billion
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Autarchy as used in the text refers to
(a) an economy that does not trade. (b) an economy that trades primary products in exchange for manufactures. (c) developing country dictatorships. (d) the caste system and related social structures.
Suppose a country, whose production and consumption of cell phones is large relative to the world market, has just entered the global market. If the country is a net-importer of cell phones, we would expect:
A. an increase in both world price and quantity of cell phones. B. an increase in world price and decrease in world quantity of cell phones. C. a decrease in both world price and quantity of cell phones. D. a decrease in world price, and increase in world quantity of cell phones.
One method of addressing an excess demand in a market that is created by a price ceiling is to
a. decrease price b. ration the good c. create a price floor d. decrease supply e. have the government buy up the surplus
Which of the following would cause the real exchange rate of the U.S. dollar to appreciate?
a. the U.S. government budget deficit decreases b. capital flight from the U.S. c. the U.S. imposes import quotas d. None of the above is correct.