Suppose the MPC is .6 and consumption increases by $8 billion. Consequently, total income through the multiplier effect will:
a. $20 billion
b. $8 billion
c. $15 billion
d. $13.3 billion
Answer: a. $20 billion
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According to the Keynesian approach, a decrease in taxes
A) will decrease consumption, as the government will have to spend less. B) will not impact consumption, as most consumption is autonomous. C) will increase consumption exactly by the amount of the taxes. D) will increase consumption by an amount of less than the change in taxes.
A firm can produce 450 gallons of milk per day with 4 workers and 500 gallons per day with 5 workers. The marginal product of the fifth worker expressed in gallons per worker per day, is:
a. 35. b. 50. c. 70. d. 350.
Over the last 100 years, the U.S. labor productivity growth rate experienced its largest declines _____
a. during the Great Depression b. in the 1940s c. during the 1950s d. during the 1980s e. during the 1990s
If there is a recession, the Fed would most likely encourage banks to provide loans by:
a. buying government securities. b. raising the discount rate. c. selling government securities. d. raising the federal funds rate.