If MPC = 0.8, a $200 billion increase in government purchases would have what size effect on the "first round" of induced added consumption, and what total effect on AD?
a. increase "first round" consumption by $80 billion; increase AD by $400 billion
b. increase "first round" consumption by $160 billion; increase AD by $1 trillion
c. increase "first round" consumption by $200 billion; increase AD by $1 trillion
d. increase "first round" consumption by $800 billion; increase AD by $4 trillion
b
Economics
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A share of stock expected to pay an annual dividend of $12 forever has a market price of __________ when the Treasury bond rate is 6.5% and the stock has a risk premium of 4.5%
A) $109.09 B) $184.62 C) $266.67 D) $600
Economics
If the required reserve ratio is 0.2, what is the demand deposit multiplier?
a. 10.0 b. 0.4 c. 5.0 d. 2.5 e. 1.67
Economics