The circular flow diagram is best described as a(n)
a. abstraction of little value in macroeconomics.
b. exact representation of the cause and effect relationship between spending and employment.
c. model that clarifies the relationship between spending and income.
d. model to explain the relationship between the federal deficit and tax revenues.
c
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Based on the table above, if the wage rate is $500 and the price of output is $5, how many workers should the firm hire?
What will be an ideal response?
The greater the MPC: a. the greater the fraction of an increase in AD due to an increase in government purchases that is consumption. b. the smaller the fraction of an increase in AD due to an increase in government purchases that is consumption. c. the greater the change in government purchases required to achieve a given change in AD
d. none of the above