When an economy is operating well below its full-employment capacity and the marginal propensity to consume is 3/4, a $10 billion increase in investment will cause the equilibrium income to rise by
a. $5 billion.
b. $10 billion.
c. $20 billion.
d. $40 billion.
D
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For a monopolist, marginal revenue equals
A. Price times quantity. B. Price. C. The change in quantity divided by the change in total revenue. D. The change in total revenue divided by the change in quantity.
Explain the relationship between average fixed cost and marginal cost.
What will be an ideal response?
A higher interest rate
A. decreases the motivation to delay consumption and, therefore, save. B. increases the motivation to delay consumption and, therefore, borrow. C. decreases the motivation to delay consumption and, therefore, borrow. D. increases the motivation to delay consumption and, therefore, save.
Opportunistic disinflation occurs when policymakers:
A. take advantage of positive supply shocks. B. change the target inflation rate. C. are able to permanently lower inflation. D. all of the answers given are correct.