Businesses in the United States cut their investment projects by $30 billion. If the MPC is 2, what will be the impact on the national income (Y)?
A. Y will fall by $15 billion.
B. Y will fall by $30 billion.
C. Y will fall by $60 billion.
D. Y will fall by $120 billion.
Answer: C
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
In order to reduce market risk associated with bonds held in inventory, a dealer can
A) take a long position in bond futures. B) take a short position in bond futures. C) purchase bonds at the mark-to-market settlement price. D) use settlement by offset procedures.
If controlling the level of military expenditures is the most important goal, the most appropriate type of procurement contract would be _____
a. fixed fee b. cost plus fixed fee c. cost plus percentage fee d. cost plus incentive fee
In this economic growth and production possibilities curve, what does point F represent compared to point B?
a. more housing units but the same number of food units
b. more housing units and more food units
c. more food units but the same number of housing units
d. the elimination of scarcity in housing and food