Assume the economy is in recession, the MPC is 0.80, and an increase of $200 billion in spending is needed in order to reach full employment. The target can be reached if government spending is increased by:

Recall the Application. If country A has a lower overall income tax rate than country B, and labor can freely and easily move between the two countries, ________ in country A will tend to ________

A) labor demand; decrease B) labor supply; decrease C) labor demand; increase D) labor supply; increase

Poor economies may have difficulty growing because

a. their production possibilities curves slope upward instead of downward b. they cannot cut back on their production of consumption goods to increase their production of capital goods c. they have a solid consumption base already in place d. their resource bases are fully developed e. the law of increasing costs makes it hard to produce more goods