If an increase in government spending of 40 units accompanied by an equal increase in taxes caused equilibrium income to rise by 40 units, the autonomous expenditure multiplier must be
a. 10.
b. 1.
c. 4.
d. not enough information is given to calculate the multiplier.
D
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When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are practicing the strategy of
A. price leadership. B. collusion. C. interindustry competition. D. limit pricing.
A university must decide if it should stop offering foreign language classes. This decision involves answering the economic question of "how to produce."
Indicate whether the statement is true or false
Producing goods can add to net wealth, but rendering services cannot. Explain.
What will be an ideal response?
When the yield curve is downward-sloping,
A) short-term yields are higher than long-term yields. B) long-term yields are higher than short-term yields. C) the bond market is anticipating the U.S. Treasury may default on its obligations. D) the inflation rate is expected to rise.