12) Bubba, an accountant earns $50,000 a year. He spends $40,000 and saves $10,0
ID: 1173665 • Letter: 1
Question
12) Bubba, an accountant earns $50,000 a year. He spends $40,000 and saves $10,00. what is Bubba's average propensity to consume ? A) .9 B) .8 C) .75 D) .5 E) none of the above 11 )According to the Keynesian the appropriate police for the government with regard to unemployment would be to: A) increase taxes B) balance the budget C) decrease the supply of money D)increase government spending E) none of the above 10) According to the classical school, which type of unemployment are possible? A) short term or temporary unemployment B) voluntary unemployment C) long term, involuntary unemployment D) both A and B are possible E) all of the above are possible 9) which of the following is false with regard to federal funds market? A) the transaction are completed through the account balances at the federal reserve banks B) there is no collateral for the loan C) the loans are short term D) the federal funds rate is an operating target of monetary policy E) all of the above are true
Explanation / Answer
12.
B.
Average propensity to consume = 40000/50000 = .8
11.
D.
With increased level of government spending, the AD will increase, that will be catered by the AS and new jobs will be created.
10.
D
As per the classical viewpoint, the short term or voluntary unemployment is possible in the economy.
9.
E
It does not require collateral as well as it is settled using the account balances. Besides, it is short term in nature.
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