When positive externalities exist, the private market equilibrium represents a
A) market price which is too low and a market quantity which is too low.
B) market price which is too low and a market quantity which is too high.
C) market price which is too high and a market quantity which is too low.
D) market price which is too high and a market quantity which is too high.
C
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If the Fed decreases the money supply, the interest rate
a. decreases and aggregate spending increases. b. decreases and aggregate spending decreases. c. increases and aggregate spending decreases. d. increases and aggregate spending increases. e. increases and money demand decreases.
Assume that the MPC is 0.80 and investment rises by $50 million. How much additional saving will this generate in the second round of spending?
A. $10 million B. $40 million C. $50 million D. $62.5 million E. $250 million