Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)
A) increase in equilibrium real GDP equal to $500 billion.
B) increase in equilibrium real GDP equal to $800 billion.
C) decrease in equilibrium real GDP equal to $800 billion.
D) decrease in equilibrium real GDP equal to $500 billion.
D
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If there is surplus of a good, then the quantity demanded ________ the quantity supplied and the price will ________
A) is less than; rise B) is less than; fall C) is greater than; rise D) is greater than; fall
Cost-plus pricing may be a reasonable way to determine price when
A) marginal cost and average cost are about the same. B) marginal cost differs significantly from average cost. C) marginal cost and average fixed cost are roughly equal. D) marginal cost is very low.
Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. With the tariff in place, the United States produces
A. 25 million pounds of rice B. 10 million pounds of rice C. 31 million pounds of rice D. 15 million pounds of rice
Based on the graph showing the run-up of nominal home prices, home prices first began a long upward trend in the ______.
a. 1910s
b. early 1930s
c. 1940s
d. early 1990s