Figure 5-5
Figure 5-5 shows a consumer budget line for French fries and hamburgers. The household allocates a budget for these two goods.. If the price of an order of french fries is $2, how much income is allocated to fries and burgers combined?
a.
$2
b.
$4
c.
$20
d.
$40
c
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A 45-degree line on a graph with expenditures, E, on the vertical axis and production, Y, on the horizontal axis, represents
A) the line of disequilibrium levels of income. B) all possible equilibrium levels of production and expenditures. C) some of the equilibrium levels of production and expenditures. D) None of the above.
Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by:
A. $8 billion B. $13.3 billion C. $15 billion D. $20 billion