If the MPC is 0.9, and the government cuts spending by $200b, the overall effect on GDP will be:
A. an increase of $2,000b.
B. an increase of $180b.
C. a decrease of $1,800b.
D. a decrease of $2,000b.
Answer: D
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Refer to Figure 8.1. If Charla and Mirna agree to pay each other $350 to install the pollution-control device on their heating systems, the dominant strategy for the players would be for Charla to play ________ and for Mirna to play ________
A) Install; Install B) Install; Don't Install C) Don't Install; Install D) Don't Install; Don't Install
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, coordination of work teams is becoming more difficult because of increased bureaucracy. It is likely that continued growth will result in:
A. economies of scale. B. Gigantic Company achieving the minimum efficient scale of production. C. diseconomies of scale. D. increasing marginal returns.
Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity cost of producing an additional 10 wind
chimes? A) 2 bird houses B) 15 bird houses C) 30 bird houses D) 45 bird houses
Refer to the table. Suppose that the transactions demand for money is $300 billion and the money supply is $700 billion. A decrease in the money supply to $600 billion would cause the interest rate to:
A. Rise to 7 percent
B. Rise to 6 percent
C. Fall to 4 percent
D. Fall to 5 percent