Suppose that the economy is in equilibrium at an income level of $2,000 when Ii = $200, and that the MPC = .75 . If Ii falls by $50, the equilibrium level of income will fall by
a. $50
b. $100
c. $200
d. $250
e. $400
C
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Related to the Economics in Practice on p. 478: According to the "paradox of thrift," increased efforts to save will cause a(n)
A. decrease in income but an increase in saving. B. increase in income and an increase in overall saving. C. increase in income but no overall change in saving. D. decrease in income and an overall decrease in saving.
The purpose of social regulation is
A) to force a firm to produce at the point where marginal cost equals marginal revenue. B) to control the quality of service provided by a monopolist. C) to control the price that regulated enterprises are allowed to charge. D) to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods.
When diminishing marginal returns set in, total product
a. is negative b. decreases at an increasing rate c. decreases at a decreasing rate d. increases at an increasing rate e. increases at a decreasing rate
The Lorenz curve showing perfect income equality would be
A. I.
B. J.
C. K.
D. L.