If spending increased by $200, and the GDP increased $1,000 as a result, the MPC must be:
A. 0.80
B. 0.75
C. 4
D. 5
A. 0.80
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Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher B. higher; potential C. lower; higher D. lower; potential
The "real business cycle" (RBC) model adapts the Lucas model by replacing its assumption of
A) demand shocks as primary generators of cycles. B) adaptive expectations. C) continuous market-clearing. D) slow wage and price adjustment.
Explain how the "euro crisis" could potentially affect the following:
1.Exports from the United States 2. Supply chains of U.S. manufacturers. 3. U.S. banks
Which of the following is corrrect?
A) Governments can not achieve the level of output they want. B) Changing government spending or taxes is easy. C) Investment will remain constant. D) Expectations do not matter for government to change spending or taxes.