If the government wishes to decrease GDP by $2,000b, and the MPC is 0.6, it should:
A. increase its spending by $800b.
B. decrease its spending by $800b.
C. decrease its spending by $1,200b.
D. increase its spending by $1,200b.
Answer: B
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Three friends stay in an apartment. Their landlord offers to air-condition the apartment if they pay for the installation charges. Although they all want an air-conditioner, none of them say so. This is an example of the ________
A) free-rider problem B) paradox of thrift C) tragedy of commons D) paradox of plenty
If the nominal wage is $10 per hour and the expected price level is 2 and the actual price level is 4, then:
a. the expected real wage rate is greater than the actual real wage rate. b. the expected real wage rate is greater than the actual nominal wage rate. c. the expected real wage rate is less than the actual real wage rate. d. the actual real wage rate is greater than the actual nominal wage rate.