Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding were Ryan's only options for that hour. The opportunity cost to him of studying is Choose one answer.
a. the improvement in his grades from studying for the hour.
b. the difference between the improvement in his grades and the enjoyment from bike riding.
c. the enjoyment and exercise he would have received from bike riding.
d. zero since neither activity required Ryan to spend any money.
e. the value of the knowledge he gained by studying.
c. the enjoyment and exercise he would have received from bike riding.
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Suppose the marginal propensity to consume equals .8 (i.e., c1 = .8). Given this information, which of the following events will cause the largest increase in output?
A) G increases by 200 B) T decreases by 200 C) I increases by 150 D) both A and B
The purchase of a new house is the one form of
a. investment that is financed by private saving rather than public saving. b. household spending that is not counted as part of investment in the national income accounts. c. household spending that is investment rather than consumption. d. household spending that does not contribute to GDP.