A country's government plans a $2 billion increase in government purchases in hopes of increasing real GDP in the economy by $40 billion. The plan would work if the MPS for this economy is
A. 0.1.
B. 0.2.
C. 0.05.
D. 0.25.
Answer: C
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If households increase their saving at the same time that the government increases its deficit,
A) the demand and supply curves for bonds will be unaffected. B) the demand curve for bonds will shift to the left. C) the supply curve for bonds will shift to the right. D) the equilibrium interest rate will definitely rise.
Which of the following is a determinant of price elasticity of demand?
a. Availability of substitute goods b. Excess capacity c. Scale of production d. Inventories e. Cost of production
What is the motivating force behind the free market?
a) competition b) the invisible hand c) self-interest d) Specialization
Which of the following is NOT a source of rivalry in economic transactions?
A. Producer?producer rivalry B. Consumer?producer rivalry C. Government?producer rivalry D. All of the statements associated with this question are correct.