If 30 billion in new investment was added to the economy and MPC was 0.90, real GDP would increase by:
a. 30 billion.
b. 90 billion.
c. 100 billion.
d. 210 billion.
e. 300 billion.
QUESTION 2The conduct of monetary policy is the responsibility of:
a. commercial banks.
b. the U.S. Treasury.
c. the Federal Reserve System.
d. the Congress and the president.
QUESTION 3Which of the following is not a characteristic of capitalism?
a. Private ownership of the factors of production.
b. Businesses make their own product and price decisions.
c. Public ownership of the factors of production.
d. Decentralized decision-making using markets.
QUESTION 4The spending multiplier is:
a. 1 / (1 MPC).
b. 1 MPC.
c. MPC.
d. MPC / (1 MPC).
QUESTION 5Which of the following is responsible for controlling the money supply in the United States?
a. The U.S. Congress.
b. The Board of Governors of the Federal Reserve System.
c. The U.S. Treasury.
d. The Council of Economic Advisors.
QUESTION 6The economic system characterized by private ownership of resources and market is:
a. capitalism. b. communism.
c. fascism. d. socialism.
QUESTION 7Suppose that John Maestro, the owner of a tennis shop in Evanston, Illinois, decides to purchase a new machine that restrings tennis rackets in half the time it formerly took. The new technology costs 1,000 . and the MPC is 0.80 . How much real GDP will be generated from John's 1,000 initial investment?
a. 200
b. 500
c. 1,000
d. 2,000
e. 5,000
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