If national income increases by $20 million and consumption increases by $5 million, the marginal propensity is consume is
What will be an ideal response?
.25
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If the actual capital-labor ratio is above the steady-state capital labor ratio, growth from convergence will be ________, and the economy will grow ________ than it will along a balanced growth path
A) negative; slower B) negative; faster C) positive; slower D) positive; faster
Which of the following was NOT used to finance the Civil War (1861–1865)?
(a) Taxation (b) Borrowing (c) Printing money (d) Large voluntary contributions from individuals opposed to slavery
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John should:
A. expand, since he expects to earn $320,000 by expanding, and it will only cost him $150,000 to do so. B. not expand, because there is a chance John will earn the same as if he didn't expand and would be out the $150,000 investment. C. not expand, since he expects to earn $120,000 more by expanding than not, and it will cost him $150,000 to do so. D. expand, since he has a 70 percent chance of earning more than the cost of expansion.
Suppose Fed's purchase of government bonds results in a $120,000 increase in the excess reserves of a particular bank. What would be the applicable reserve requirement for the whole banking system to be able to expand the money supply by $600,000?
a. 10 percent b. 12 percent c. 16 percent d. 20 percent e. 25 percent