Suppose that a consumer has a marginal propensity to consume of 0.7. If this consumer earns an extra €2, her consumption spending would be expected to increase by:
A. €0.60.
B. €0.70.
C. €1.40.
D. €1.70.
Ans: C. €1.40.
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Keynesian economists link the start of the Great Depression to the drop in construction spending and the downturn in consumption following the stock market crashes of 1929
Indicate whether the statement is true or false
Economists differ in their views of the role of the government in promoting economic growth. At the very least, the government should
a. lend support to the invisible hand by maintaining property rights and political stability. b. limit foreign investment to industries that don't already exist in the country. c. impose trade restrictions to protect the interests of domestic producers and consumers. d. subsidize key industries.
The Robinson-Patman Act places restrictions on ______.
a. game theory strategies b. the Herfindahl-Hirshman Index c. the bandwagon effect d. allowable price discrimination
Suppose income falls 5 percent in a year, and as a result, housing construction falls from 10 million to 5 million units annually. Based on this information, housing starts are
A. Price-inelastic. B. Price-elastic. C. A normal good. D. An inferior good.