The Table Shows a Private, Open Economy

question 30

Multiple Choice

The table shows a private, open economy.All figures are in billions of dollars. Refer to the above table.If the marginal propensity to consume in this economy is 0.8, a $10 increase in its net exports would increase its equilibrium real GDP by:

• A)$25
• B)$50
• C)$100
• D)$200

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Definitions:

Monopolistically Competitive

A market structure where many firms sell products that are similar, but not identical, allowing for significant price and product differentiation.

Normal Profits

The level of profit needed for a company to remain competitive in the market, covering its opportunity costs.

Long Run

The time period in which all factors of production can be varied, but technology remains constant.

Product Differentiation

A marketing strategy that businesses use to distinguish their product from similar offerings in the market, through variations in quality, features, style, or branding.