A $100 billion increase in government purchases would:
a. increase AD by $500 billion if MPC = 0.8.
b. decrease AD by $300 billion if MPC = 2/3.
c. decrease AD by $200 billion if MPC = 0.9.
d. decrease AD by $40 billion if MPC = 0.4.
a
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Decision making on the margin involves
A) comparing the marginal cost and marginal benefits when making a decision. B) comparing the total cost and the total benefit when making a decision. C) eliminating the additional cost when making a decision. D) determining the total benefits of a decision. E) comparing the benefits from the social interest to the benefits from the person's self-interest.
Catherine's demand for fish takes the conventional form of a downward-sloping demand curve. When the price of fish falls, her consumer surplus
a. increases b. decreases c. remains unchanged because the demand curve didn't change d. remains unchanged because the quantity demanded remains unchanged e. decreases only if price elasticity of demand is greater than one