If the marginal propensity to save (MPS) is 0.5 and net exports falls by $100 million, then
A) real Gross Domestic Product (GDP) will increase by $100 million.
B) real Gross Domestic Product (GDP) will fall by $200 million.
C) real Gross Domestic Product (GDP) will not change.
D) the effect on real Gross Domestic Product (GDP) cannot be determined from the given information.
B
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When there is market failure so that a market produces less than the efficient amount,
A) consumer surplus definitely is larger than when the efficient quantity is produced. B) the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. C) there is a deadweight loss. D) consumers definitely lose and producers definitely gain. E) consumers definitely gain and producers definitely lose.
Suppose Fiona's base consumption equals $1,000 per month when her income is zero. Fiona earns $5,000 per month, and her marginal propensity to consume is 0.8 . If her monthly income increases by $1,500, her total consumption will be _____
a. $8,400 b. $10,000 c. $6,200 d. $4,800