Author Question: Assume an economy experiences, for a given period, a 1 increase in output and a 5 increase in ... (Read 90 times)

michelleunicorn

  • Hero Member
  • *****
  • Posts: 565
Assume an economy experiences, for a given period, a 1 increase in output and a 5 increase in productivity. Given this information, we know that which of the following occurred for this economy during this period?
 
  A) The unemployment rate increased during this period.
  B) The unemployment rate decreased during this period.
  C) The unemployment rate did not change during this period.
  D) The effects on the unemployment rate are ambiguous.
  E) none of the above

Question 2

Discuss and explain what effect a reduction in the marginal propensity to consume has on the size of the multiplier.
 
  What will be an ideal response?



Anton

  • Sr. Member
  • ****
  • Posts: 302
Answer to Question 1

A

Answer to Question 2

A reduction in the marginal propensity to consume will cause a reduction in the multiplier. When firms increase production in response to some initial change in demand, households will increase their consumption by a smaller amount when the mpc falls. So, the income-induced change in demand will be that much smaller causing a smaller multiplier effect.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

Your heart beats over 36 million times a year.

Did you know?

It is widely believed that giving a daily oral dose of aspirin to heart attack patients improves their chances of survival because the aspirin blocks the formation of new blood clots.

Did you know?

Only 12 hours after an egg cell is fertilized by a sperm cell, the egg cell starts to divide. As it continues to divide, it moves along the fallopian tube toward the uterus at about 1 inch per day.

For a complete list of videos, visit our video library