Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase GDP by 30 percent, and they want to change taxes and government spending by equal amounts, how much would government spending and taxes each need to increase?

Pizza is a normal good. In the above figure, the shift in the demand curve from D to D2 can be the result of

A) a decrease in the price of soda, a complement to pizza. B) an increase in the price of hamburgers, a substitute for pizza. C) a decrease in income. D) a study that shows that pizza is a very healthy food. E) an increase in the cost of producing pizza.

Deposit insurance can lead to ________

A) an increase in adverse selection B) a decrease in bank costs C) a decrease in bank lending rates D) an increase in risks banks take on