Answer the following statement(s) true (T) or false (F)
1. If the marginal propensity to save is 0.25 in an economy with no taxes and no imports, the marginal propensity to consume is 1.25.
2. Between 2003 and 2010, the unemployment rate in Ft. Myers, Florida, decreased from 13% to 3%.
3. Inventories are counted as investment because inventories are a source of future sales.
4. In a simple economy with no taxes, government spending, exports, or imports, if disposable income increases by $500 and $450 is consumed, $950 is saved.
1. False
2. False
3. True
4. False
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In order for a nation to be able to consume more in the future, it needs to
A) produce less today in aggregate and save the difference between consumption and income. B) produce more today in aggregate and save the difference between consumption and production. C) consume more today in aggregate and borrow the difference between consumption and income. D) consume less today in aggregate and save the difference between consumption and income.
Market failure implies that the market mechanism
A. Causes shortages or surpluses in the market. B. Leads the economy to a point outside the production possibilities curve. C. Causes government failure. D. Leads the economy to the wrong mix of output.