In a certain economy, the components of planned spending are given by: C = 500 + 0.8 (Y - T) - 300rI P = 200 - 400rG = 200NX = 10T = 150 Given the information about the economy above, what would be the impact on short-run equilibrium output of a one-percentage-point increase in the real interest rate, assuming the income-expenditure multiplier equals 5?
A. Short-run equilibrium output would decrease by 35 units.
B. Short-run equilibrium output would decrease by 700 units.
C. Short-run equilibrium output would decrease by 7 units.
D. Short-run equilibrium output would increase by 35 units.
Answer: A
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a. 1.0 b. 2.5 c. 0.4 d. 3.0 e. none of the
In firm X, labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs. A 20 percent increase in wages would increase production costs by:
A. 23 percent in firm X and 20 percent in firm Y B. 19 percent in firm X and 15 percent in firm Y C. 15 percent in firm X and 6 percent in firm Y D. 17 percent in firm X and 8 percent in firm Y
Examples from the United States suggest that the cost to consumers per job saved in highly protected industries is low
Indicate whether the statement is true or false
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