If net taxes are decreased by $500 billion, and the marginal propensity to consume is 0.80, then which of the following correctly describes the increase in real GDP that will be generated by the decrease in net taxes?

Refer to Figure 11-6. In the figure above which letter represents the average fixed cost curve?

A) A B) B C) C D) D

The new Keynesian economists believed that:

a. wages and prices are flexible in the short run. b. wages are flexible but prices are not flexible in the long run. c. wages are not flexible but prices are flexible in the short run. d. wages and prices are not flexible in the short run. e. wages and prices are not flexible in the long run.