The federal government buys $10 million worth of aircraft engines from General Motors. If the MPC is .80 what will be the impact on aggregate demand, other things being equal?
a. Aggregate demand will increase $8 million

In a two-period model, holding everything else constant, an increase in current taxes

A) unambiguously increases the current account surplus. B) unambiguously decreases the current account surplus. C) has an uncertain effect on the current account surplus. D) has no effect on the current account surplus, as long as Ricardian equivalence holds.

Fab Tools Inc can produce 150 widgets and 100 axes in a month. Another company AllMyTools Inc can produce 80 widgets and 50 axes per month. Which of the following statements is true?

a. Fab Tools has an absolute advantage in production of both goods. b. AllMyTools has an absolute advantage in production of both goods. c. AllMyTools has a comparative advantage in production of axes. d. Fab Tools has a comparative advantage in production of widgets only.