If marginal propensity to save equals 0.50, then the marginal propensity to consume is:

We see that the Netherlands, Belgium, and Ireland trade considerably more with the United States than with many other countries

A) This is explained by the gravity model, since these are all large countries. B) This is explained by the gravity model, since these are all small countries. C) This fails to be consistent with the gravity model, since these are small countries. D) This fails to be consistent with the gravity model, since these are large countries. E) This is explained by the gravity model, since they do not share borders.

The government bail-out of large institutions creates the problem of moral hazard, which means that these large firms will:

A. Not be able to pay back the bail-out money B. Have an incentive to make highly risky investments C. Now have to play it safer to reduce their risks D. Be limited in terms of the securities and services that they get involved in