If the MPC is 0.8, and the government spends an additional $100b, the overall effect on GDP will be:
A. $400b.
B. $180b.
C. $500b.
D. $120b.
Answer: C
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A product's price elasticity of demand depends critically on the availability of substitutes
Indicate whether the statement is true or false
What is the trade-off that consumers face when buying the product of a monopolistically competitive firm?
A) Consumers pay higher prices but the products are produced by highly efficient firms. B) Consumers pay lower prices but have fewer choices. C) Consumers pay a price greater than marginal cost, but have the luxury of choices more suited to their tastes. D) Consumers pay higher prices but receive better quality goods compared to the output of perfectly competitive firms.
A needy family consisting of a mother and three children currently receives cash benefits that average $12 per day. The mother of this family is allowed to earn an average of $4 per day before her benefits begin to decline. After that, for each dollar earned, cash benefits decline by 67 cents for each dollar earned. Assume that she can find work at $4 per hour. How many hours will she have to work per day before her benefits are eliminated?
What will be an ideal response?
Which of the following would result in a decrease in aggregate demand?
a. A higher domestic price level b. Higher raw materials prices c. Higher rates of tax d. Technological advances e. Expansionary government policy