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
a. $20 billion
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Mexico and the members of OPEC produce crude oil. Realizing that it would be in their best interests to form an agreement on production goals, a meeting is arranged and an informal, verbal agreement is reached. If both Mexico and OPEC abide by the agreement, then OPEC's profit will be $200 million and Mexico's profit will be $100 million. If both Mexico and OPEC cheat on the agreement, then OPEC's profit will be $175 million and Mexico's profit will be $80 million. If only OPEC cheats, then OPEC's profit will be $185 million, and Mexico's profit will be $60 million. If only Mexico cheats, then Mexico's profit will be $110 million, and OPEC's profit will be $150 million. You may find it helpful to fill in the payoff matrix below. src="https://sciemce.com/media/4/ppg__rrr0818190951__f1q241g1.jpg" alt="" style="vertical-align: 0.0px;" height="203" width="377" />This game is ________ because ________.
A. not a prisoner's dilemma; OPEC does not have a dominant strategy
B. not a prisoner's dilemma; cheating is better for both
C. a prisoner's dilemma; cheating is better for both
D. a prisoner's dilemma; not cheating is better for both
Everything else held constant, an increase in the excess reserve ratio will mean ________ in the M2 money multiplier and ________ in the M2 money supply
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
An individual is endowed with $100 of income in period 1, and will receive an income of 121 in period 2. The interest rate is 10%, and there are only 2 periods. The maximum second period consumption is
a) 100 b) 121 c) 221 d) 231 e) 233.1
Consider that Britain is trying to maintain a fixed exchange rate with respect to the U.S. dollar. However, the present situation in the foreign exchange market is conducive for the British pound to depreciate with respect to the U.S. dollar. Which of the following interventions will stem the pressures for depreciation of the pound?
A. The government of Britain should increase the country's money supply. B. The government of Britain should sell pounds and buy dollars. C. The government of Britain should do nothing, as a fixed rate cannot change. D. The government of Britain should buy pounds and sell dollars.