The economy is in a recession. The government enacts a policy to increase purchases by $2 billion. The MPC is 0.8. What would be the full increase in real GDP from the change in government purchases at a given price level?
A. $16 billion
B. $10 billion
C. $6 billion
D. $8 billion
Answer: B
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Suppose the government wants to reduce the illegal importation of exotic animals used as pets and tries to achieve this goal by interrupting the supply of illegally imported exotic animals
If the demand for these animals is highly elastic, this government effort will result in A) a small reduction in the quantity of exotic pets demanded. B) a large reduction in the quantity of exotic pets demanded. C) no change in the quantity of exotic pets demanded. D) an increase in the quantity of exotic pets demanded.
Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution
If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution, then A) Firm B sells its permits to Firm A for a price above $6,000. B) Firm A sells its permits to Firm B for a price below $6,000. C) Firm A sells its permits to Firm B for a price above $6,000. D) Firm B sells its permits to Firm A for a price below $6,000. E) Neither Firm A nor Firm B sells permits because neither has extra permits.
As compared to a perfectly competitive firm, a monopolistically competitive firm will:
A. have less control over price. B. face more barriers to entry. C. face more competitors. D. sell a more differentiated product.
The price elasticity of demand for a monopolist's product depends on
A) the number and similarity of substitutes. B) the ATC of the item it produces. C) the AVC of the item it produces. D) the MC of the item it produces.