When Jack's income increases by 5,000, he spends an additional 4,000 dollars. This implies that his marginal propensity to consume is 1.25.
Indicate whether the statement is true or false
Ques. 2If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is
A) 2. B) 5. C) 10. D) 20.
Ques. 3Refer to Table 20-13. Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. Use the information in the table to calculate the inflation rate for 2016, as measured by the consumer price index.
What will be an ideal response?
Ques. 4Refer to Figure 16-7. The owners of the Lizard Lounge are considering the following four pricing options:
a. A single price scheme where the cocktail price equals the monopoly price.
b. A single price scheme where the cocktail price equals the competitive price.
c. A two-part tariff: a monopoly cocktail price and a cover charge that will generate total revenue equal to the area X.
d. A two-part tariff: a competitive cocktail price and whatever cover charge that will generate a total revenue equivalent to the area X + Y + Z.
Which pricing scheme(s) achieve the economically efficient outcome?
A) schemes a and c B) scheme b C) schemes b and d D) scheme d only
Ques. 5If the economy is producing at potential GDP
A) the short-run aggregate supply curve must be vertical.
B) inflation in the economy is at its natural rate.
C) the Phillips curve must be positively sloped.
D) unemployment is at its natural rate.
Ques. 6Suppose you withdraw 500 from your checking account deposit and bury it in a jar in your back yard. If the required reserve ratio is 10 percent, checking account deposits in the banking system as a whole could drop up to a maximum of
A) 0. B) 50. C) 500. D) 5,000.
Ques. 7Workers who dislike risk
A) prefer to be paid a salary rather than a wage.
B) prefer a salary system to a commission compensation system.
C) prefer to be paid monthly rather than weekly or daily.
D) prefer a piece-rate compensation system to a salary system.
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