Exam 3: National Income: Where It Comes From and Where It Goes

The property of diminishing marginal product means that, after a point, when additional quantities of:

When economists speak of "the" interest rate, they mean:

Assume that the consumption function is given by C = 150 + 0.85(Y - T) and the tax function is given by T = t₀ + t₁Y. If t₀ increases by 1 unit, then consumption:

An economy's factors of production and its production function determine the economy's:

In a closed economy, Y - C - G equals:

If the consumption function is given by the equation C = 500 + 0.5Y, the production function is Y = 50K^0.5L^0.5, where K = 100 and L = 100, then C equals:

According to the model developed in Chapter 3, when taxes decrease without a change in government spending:

In the classical model with fixed income, if the demand for goods and services is greater than the supply, the interest rate will:

Use the model developed in Chapter 3, but assume that consumption decreases, other things being equal, when the interest rate rises. If there is a technological advance that leads to an increase in investment demand:

When government spending increases and taxes are increased by an equal amount, interest rates:

The real wage will increase if:

Public saving is:

Crowding out occurs when an increase in government spending ______ the interest rate and investment ______.

The investment function slopes ______ because there are ______ investment projects that are profitable as the interest rate decreases.

The price received by each factor of production for its services is determined by:

In a Cobb-Douglas production function the marginal product of capital will increase if:

The circular flow model shows that households use income for:

Assume that equilibrium GDP (Y) is 5,000. Consumption (C). is given by the equation C = 500 + 0.6Y. No government exists. In this case, equilibrium investment is:

Assume that equilibrium GDP (Y) is 5,000. Consumption (C) is given by the equation C = 500 + 0.6Y. Investment (I) is given by the equation I = 2,000 - 100r, where r is the real interest rate in percent. No government exists. In this case, the equilibrium real interest rate is:

A firm's economic profit is: