When the marginal propensity to consume foreign imports (MPCF) rises, ceteris paribus, what happens to the trade balance?
a. It increases.
b. It decreases.
c. It depends on what happens to the MPC of domestic goods.
d. It will not change.
Ans: b. It decreases.
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Refer to the Article Summary. The article discusses income inequality, and for some people this means a more equitable distribution of income is needed in the economy. What is meant by a more equitable distribution of income?
A) Income distributed based on skill levels B) a more productively efficient distribution of income C) a more allocatively efficient distribution of income D) a more fair distribution of income
According to the circular flow of income and output, which of the following is not true?
A. Total income and total output must be equal. B. Goods and services flow in one direction and money payments flow in the other direction. C. In every economic? transaction, the seller receives exactly the same amount that the buyer spends. D. ?Goods, services and money all flow in one direction since money pays for the goods and services.