Author Question: Describe the differences between capitalism and socialism.[br][br][b][color=red]Question ... (Read 73 times)

ashley · **on:** Jun 30, 2018

Describe the differences between capitalism and socialism.

Question 2

Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.80 . A decrease in government spending of 1 billion would result in a decrease in GDP of:
a. 0.
b. 0.8 billion.
c. 1.0 billion.
d. 5.0 billion.
e. 8.0 billion.

pangili4 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Capitalism is characterized by private ownership over the means of production (the factors of production are privately owned) and economic activity is coordinated through a system of markets and prices (consumers and firms in the market make economic choices). Socialism in characterized by public or collective ownership over the means of production and economic activity is coordinated by the government.

Answer to Question 2

d