Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion.
b. $20 billion.
c. $50 billion.
d. $80 billion.
d
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Refer to Figure f. A benefit function is plotted in Figure f. The distance C represents the:
A. risk premium of the consumption bundle.
B. expected utility of the consumption bundle.
C. certainty equivalent of the consumption bundle.
D. expected consumption.
The tax incidence of a payroll tax results in an increase in net wages.
Answer the following statement true (T) or false (F)
The value of money as a means of payment:
A. depends on whether the majority of M1 is in currency or demand deposits. B. depends on the amount of money in the economy, among other things. C. is fixed once relative prices are set. D. is independent of changes in the amount of money in the economy.
If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is
A) 25 utils. B) 20 utils. C) 5 utils. D) unknown as more information is needed to determine the answer.