Consider a graph illustrating the upward sloping supply curve for coffee. What would you expect to happen if the government decided to levy a 75-cents per gallon subsidy on coffee?
a. There would be a movement up along the supply curve.
b. There would be a movement down along the supply curve.
c. The supply curve would shift to the left.
d. The supply curve would shift to the right.
e. None of the above.
Ans: d. The supply curve would shift to the right.
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In the neoclassical growth model without technological progress, the steady-state growth rate of per capita output is
a. the growth of technology plus the growth of population. b. the growth of population. c. the growth of technology. d. the growth of technology plus population plus depreciation.
Government purchases rise by $100 billion and the MPC equals 0.75. Assuming that idle resources exist at each expenditure round, and the multiplier is operative, the change in Real GDP equals
A) $40 billion. B) $75 billion. C) $400 billion. D) $750 billion. E) $250 billion.