Assume an economy with an upward-sloping aggregate supply curve and an MPC of 0.80. An increase in investment spending of $50 billion will most likely increase total income by
A. $200 billion.
B. $40 billion.
C. more than $200 billion.
D. more than $50 billion but less than $250 billion.
Answer: D
Economics
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Tennis balls and tennis rackets are complements. If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded, the cross elasticity of demand equals
A) 3. B) -3. C) 1/3. D) -1/3. E) 9.
Economics
How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks
What will be the new amount of deposits in the second and third rounds?
Economics