If the marginal propensity to save is 0.40, a 20 billion increase in investment spending would cause equilibrium output to:
a. increase by 50.
b. increase by 80.
c. decrease by 33.
d. decrease by 40.
e. decrease by 20.
QUESTION 2The Monetary Control Act of 1980:
a. created less competition among various financial institutions.
b. allowed fewer institutions to offer checking account services.
c. restricted savings and loan associations to long-term loans.
d. all of the above.
e. none of the above.
QUESTION 3Adam Smith believed that a nation would produce the maximum wealth by relying on government to make public interest economic decisions.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4If the economy experiences a recessionary gap then:
a. aggregate expenditures exceed the level of spending necessary to provide for full employment.
b. Keynesian economics would recommend a reduction in government spending or an increase in taxes.
c. Keynesian economics would recommend an increase in government spending or a decrease in taxes.
d. the equilibrium level of output and income is above full employment.
QUESTION 5Which of the following laws increased competition among financial institutions and gave the Fed greater control over nonmember banks?
a. The Federal Reserve Act.
b. The Equal Credit Opportunity Act.
c. The Monetary Control Act.
d. The Thrift Bailout Bill.
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