The percentage of the population in the two higher income classes (defined by Pew as having more than 200% of median family income) declined from more than 60% in the 1970s to 50% in 2015. Economists see the decline in the middle class as a
A. consequence of the decline in growth, not a cause of it.
B. Both a cause and a consequence of the decline in growth.
C. cause of the decline in growth, not a consequence of it.
D. Unrelated consequence to the decline in growth.
Answer: B
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The open economy multiplier is calculated as follows:
A) 1/[1-(marginal propensity to consume + marginal propensity to invest)] B) 1/[1-(marginal propensity to consume + marginal propensity to import)] C) 1/[1-(marginal propensity to consume + marginal propensity to invest + marginal propensity to import)] D) 1/[1-(marginal propensity to consume + marginal propensity to invest - marginal propensity to import)]
A consequence of the impact lag is that the Fed
A) may not know the impact of a change in policy. B) might not be able to correct a mistaken policy soon enough. C) may not have current information about the state of the economy. D) may see the impact of a change in policy on inflation, but not economic growth.