Assume that people experience a one-time 50 unit increase in their consumption (i.e. the intercept of the consumption function increases by 50). In this case
a. equilibrium income will rise by 50 units times the investment multiplier.
b. equilibrium income will rise by 50 units.
c. equilibrium income will rise by 50 units times the tax multiplier.
d. equilibrium income will not change because this increase is temporary.
A
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The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will
A) find this change impossible to achieve given the resources it currently possesses. B) have to employ all currently unemployed resources to accomplish this. C) incur an opportunity cost of having to give up some butter in order to make the additional amount of guns desired. D) be able to make the desired switch only if there is a significant improvement in the technology available to the nation.
Nancy's utility of wealth curve is given in the above figure. Option A gives Nancy $100 for sure. Option B gives Nancy $50 half the time and $150 half the time. Nancy's expected utility of option A
A) is greater than the expected utility of option B. B) is the same as the expected utility of option B. C) is less than the expected utility of option B. D) could be either greater or less than the expected utility of option B.