An economic model can accurately explain how the economy is organized because it is designed to include, to the extent possible, all features of the real world

Refer to the figure above. If this country is labor abundant, then according to the HO theory good X should be ________ intensive

A) capital B) labor C) both capital and labor D) Can't tell without more information

Suppose the GDP is in equilibrium at full employment and the MPC is .80. If government wants to increase its purchase of goods and services by $16 billion without changing equilibrium GDP, taxes should be:

A.  Increased by $20 billion B.  Reduced by $16 billion C.  Increased by $16 billion D.  Reduced by $20 billion