The MPC is 0.90 and there are no income taxes or imports. If government expenditures on goods and services increases by $2.0 billion, after the multiplier effect works out, aggregate expenditure increases by
A) $2.22 billion. B) $2.0 billion. C) $10 billion. D) $20 billion. E) $1.8 billion.
D
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Refer to Table 14-8. If the two firms collude, is there an incentive for either to cheat on the collusion agreement?
A) Yes, but only Brawny Juice is in a position to gain by cheating. B) Yes, but only Power Fuel is in a position to gain by cheating. C) Yes, either firm can gain if it, alone, cheats. D) No, neither firm can gain by cheating.
If a nation has a comparative advantage in the production of X, this means the nation:
A. cannot benefit by producing and trading this product. B. must give up less of other goods than other nations in producing a unit of X. C. has a production possibilities curve identical to those of other nations. D. is not subject to increasing opportunity costs.