The multiplier equals
A. change in consumption/change in real disposable income.
B. consumption/real disposable income.
C. 1/(1 - MPC).
D. 1/MPC.
Answer: C
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The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 25% real interest rate on their savings. Assume that all interest is paid out as income in the following year. In the year 2010, both families began to save. The Hatfields saved 8% of their income each year; the McCoys saved 10%. In 2010, the Hatfields consumed ________ more than the McCoys; in 2011, the Hatfields consumed ________ than the McCoys.
A. $2,000; about $250 more B. $1,000; about $800 more C. $2,000; about $250 less D. $1,000; about $800 less
For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the
A) prime rate. B) Treasury bill rate. C) federal funds rate. D) discount rate.
Assume a unit tax of $4 is placed on suppliers. They are able to pass along some of the tax to suppliers as evidenced by prices rising from $5 per unit to $7 per unit. Output declines from 10 units to 8 units
What is the ratio of the demander's share of the tax burden to the suppliers? a. 2.5 b. 2.0 c. 1.5 d. 1.0
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower