In an economy with lump-sum taxes and no international trade, if the marginal propensity to consume is 0.8, which of the following is true?
a) when consumption increases by $5, investment increases by a maximum of $1
b) when consumption increases by $5, savings increase by a maximum of $1
c) when investment increases by $1, income increases by a maximum of $5
d) when investment increases by $1, consumption increases by a maximum of $5
e )when income increases by $1, investment increases by a maximum of $5
Ans: c) when investment increases by $1, income increases by a maximum of $5
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A) $50 B) $75 C) $5 D) $15
The difference in total surplus between the socially efficient level of production and the monopolist's level of production is
a. offset by regulatory revenues. b. called a deadweight loss. c. equal to the monopolist's profit. d. Both b and c are correct.
The city of Ann Arbor Michigan buys a police car manufactured in Germany. In the GDP accounts this transaction is included in
a. in government expenditures and exports. b. government expenditures and imports. c. exports, but not government expenditures. d. imports, but not government expenditures.
If firms were faced with greater uncertainty because of concern that oil prices might rise, they might decrease expenditures on capital. In response to this change, someone who advocated "lean against the wind" policies might advocate
a. decreasing the money supply. b. increasing taxes. c. increasing government expenditures. d. All of the above