Ceteris paribus, if the price of jet fuel rose, what effect would it have on the market for air travel?
a. an increase in equilibrium price and an increase in equilibrium quantity.
b. an increase in equilibrium price and a decrease in equilibrium quantity.
c. a decrease in equilibrium price and an increase in equilibrium quantity.
d. a decrease in equilibrium price and a decrease in equilibrium quantity.
Question 2
The multiplier will be smaller, other things being equal:
a. the smaller the fraction of each dollar earned that goes to taxes.
b. the larger the MPC.
c. the smaller the fraction of each dollar of disposable income that goes to saving.
d. None of the above are true.
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