Assuming that MPC is .75, equal increases in government spending and tax collections by $10 billion will:
A. Leave the equilibrium GDP unchanged
B. Increase the equilibrium GDP by $10 billion
C. Increase the equilibrium GDP by $2.5 billion
D. Reduce the equilibrium GDP by $10 billion
B. Increase the equilibrium GDP by $10 billion
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The long-run perfectly competitive equilibrium
A. results in normal profits. B. is not economically efficient. C. will never change once it is realized. D. is realized only in constant-cost industries.
The risk-free rate is usually approximated by interest rates on U.S. government debt, because the US government:
A. backs all loans secured with that rate. B. sets all policy concerning interest rates. C. is considered extremely unlikely to default. D. will never default on a loan that it makes.
Exhibit 6-5 Workers and output data Laborers TotalProduct 0 0 1 8 2 20 3 25 4 28 5 29 In Exhibit 6-5, the marginal product of the second worker is:
A. 8. B. 10. C. 12. D. 20.
In general, the substitution effect of an increase in the price of a normal good:
A. will cause the individual to buy more of that good because they have relatively more income. B. will cause the individual to buy less of that good and more of others because it is relatively more expensive. C. will cause the individual to buy less of that good because they have relatively less income. D. will cause the individual to buy more of that good and less of others because it is relatively less expensive.