Imagine an economy that does not have international trade and is initially in equilibrium. Later the government increases the level of spending by $350 million because it received a gift from abroad. In this economy, only 65 cents of every dollar is spent, and the rest is saved. Calculate the value of the spending multiplier for this economy
a. 2.86
b. 0.286
c. 1.54
d. 0.154
e. 0.35
a
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Which international account is used to record payments for imports, receipts from exports, net interest paid abroad and net transfers?
A) the capital and financial account B) the current account C) the official settlements account D) the trade account
Why is the budget line negatively sloped?
What will be an ideal response?
The burden of debt is borne by future generations.
A. True B. False C. Uncertain
If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm?
a. The firm should use relatively more capital b. The firm should use relatively more labor c. The firm should not make any changes – they are currently efficient d. Using the Equimarginal Criterion, we can't determine the firm's efficiency level e. Both c and d