If the MPC = .80, and investment rises from $100 to $150, real GDP will increase by:
a. $50.
b. $125.
c. $20.
d. $250.
e. $200.
d
You might also like to view...
An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend, everything else held constant
A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decrease
Indexation is designed to
A) moderate the costs of inflation, not inflation itself. B) rapidly reduce inflation. C) reduce the natural rate of unemployment. D) rapidly reduce inflationary expectations.
If, as an entrepreneur, I am earning accounting profits of $50,000 per year and the opportunity cost of my time is $60,000
A) I am earning economic profits of $10,000. B) I am earning economic profits of $50,000. C) I should close my business. D) I am in a long-run equilibrium position.
Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 3 percent, then how much money should Jan's hold?
A. $8,000 B. $4,000 C. $6,000 D. $10,000