MPC, MPS, multiplier
What relationship does the MPC bear to the size of the multiplier? The MPS? What will the multiplier be when the MPS is 0, .4, .6, and 1
Explain with examples the reasons for exceptional demand curve
Examples of command economies are: a) the United States and Japan b) Sweden and Norway c) Mexico and Brazil d) Cuba and North Korea
Describe when there will be a surplus of the good?
Why the value of MPC is not greater than 1? Answer: This is because change in consumption can never be more than change in income.
In June 2005, a Big Mac sold for 6,000 pesos in Colombia and $3.00 in the United States. The exchange rate in June 2005 was 2,300 pesos per dollar. So, on Big Mac purchasing power parity grounds the Colombian peso was
Describe any two measures by which a Central Bank can attempt to decrease the gap. Answer: Central bank can decrease this gap by adopting two measures illustrated b
The demand curve for DVD games is a straight line, therefore its slope: (1) Is constant, although price elasticity of demand drops/falls as output increases. (2) Price elasticity are both stable. (3) Is constant, although price elasticity of demand increases as the pr
How does a commercial bank make money? Answer: Commercial banks are capable to make credit that is many times greater than deposits received by banks. Money creatio
Explain the concept of “economies of scale” and “increasing returns”.
Differentiate between APC and MPC. The value of which of them can be greater than another and when? Answer: APC is the average
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