Use the following table to answer the next question. All figures below are in billions of dollars.Domestic Output or Income (RGDP = DI)Consumption$240$244250250260256270262280268290274300280310286320292If gross investment is $12 billion, the equilibrium level of real GDP will be
A. $270 billion.
B. $280 billion.
C. $260 billion.
D. $290 billion.
Answer: B
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Which of the following is TRUE of the Federal Reserve System?
I. It was established in the early 1980s. II. It serves as the central bank of the United States. A) I only B) II only C) Both I and II D) Neither I nor II
A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001. Based on the information given, what is the price elasticity of demand for ice cream? A) 12% B) 0.75 (in absolute value) C) 1.33 (in absolute value) D) We do not have enough information to calculate the elasticity.
The "lemons problem" exists in the market for goods because
A) sellers tend to try to take advantage of buyers. B) buyers tend to try to take advantage of sellers. C) differences in the quality of the goods being exchanged. D) of moral hazard.
Another label for the market for loaned funds is the:
A) spot market. B) credit market. C) capital market. D) exchange market.