Answer the following statements true (T) or false (F)
1) 1 + MPS = MPC.
2) The slope of the consumption schedule is measured by the MPC.
3) A decline in the real interest rate will shift the investment demand curve to the right.
4) A specific investment will be undertaken if the expected rate of return, r, exceeds the interest rate, i.
5) Investment is highly stable; it increases over time at a very steady rate.
1) F
2) T
3) F
4) T
5) F
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Which of the following is a factor determining the natural rate of unemployment?
A. real GDP B. the business cycle C. demographics D. the labor force participation rate
If speculators believe a currency is undervalued, their trades in international exchange markets will
A) increase the surplus of the currency at the existing fixed exchange rate. B) increase the shortage of the currency at the existing fixed exchange rate. C) decrease the shortage of the currency at the existing fixed exchange rate. D) decrease the surplus of the currency at the existing fixed exchange rate.
The relative price of a textbook is
A) the money price of the textbook divided by the money price of some other good. B) the price of the textbook compared with what students think it should cost. C) the amount it cost to make the textbook. D) what the author earned for writing the textbook.
A radio manufacturer has two plants - one in Taiwan and one in California. At the current allocation of total output between the two plants, the last unit of output produced in the Taiwan plant added $8 to total cost, while the last unit of output produced in the California plant added $6 to total cost. In order to maximize profit, the firm should
A. produce all its output in the Taiwan plant. B. produce all its output in the California plant. C. keep the allocation between plants unchanged. D. switch some output from the Taiwan to the California plant. E. switch some output from the California to the Taiwan plant.