The French economist Jean-Baptiste Say transformed the equality of total output and total spending into a law that can be expressed as follows:
a. Unemployment is not possible in the short run.
b. Demand and supply are never equal.
c. Supply creates its own demand.
d. Demand creates its own supply.
c
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The marginal propensity to consume is defined as the:
a. fraction of total income not spent on consumption. b. proportion of any change in income that is spent on consumption. c. fraction of total income spent on consumption. d. fraction of a change in income that is saved.
If a bank receives a $5 million discount loan from the Fed, then the bank's reserves will
A) increase by $5 million. B) increase by more than $5 million. C) increase by less than $5 million. D) not change.
A public good will:
a. be efficiently provided by the free market as long as its total benefits exceed its total costs. b. be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. c. be provided in less than efficient quantities by the free market. d. be provided in efficient quantities by voluntary contributions. e. not be provided by the government.
The main advantage that ACE models have over other models is that:
A. they primarily use deductive methods. B. they eliminate the importance of mathematics. C. economists do not have to "solve" the model on their own. D. they look only at single equilibrium outcomes.