1. What is the eventual effect on real GDP if the government increases its purchases of goods and services by $60,000? 2. What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $60,000? Assume the MPC has not changed.
3. An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in:___.
a. a smaller eventual effect on real GDP.
b. no change to real GDP.
c. a larger eventual effect on real GDP.
d. an identical eventual effect on real GDP.

The cook corporation has two divisions--east and west. the divisions have the following revenues and expenses: east west sales $ 603,000 $ 506,000 variable costs 231,000 300,000 traceable fixed costs 151,500 192,000 allocated common corporate costs 128,600 156,000 net operating income (loss) $ 91,900 $ (142,000 ) the management of cook is considering the elimination of the west division. if the west division were eliminated, its traceable fixed costs could be avoided. total common corporate costs would be unaffected by this decision. given these data, the elimination of the west division would result in an overall company net operating income (loss)

James river jewelry is a small jewelry shop. while james river jewelry does sell typical jewelry purchased from jewelry vendors, including such items as rings, necklaces, earrings, and watches, it specializes in hard-to-find asian jewelry. although some asian jewelry is manufactured jewelry purchased from vendors in the same manner as the standard jewelry is obtained, many of the asian jewelry pieces are often unique single items purchased directly from the artisan who created the piece (the term manufactured would be an inappropriate description of these pieces). james river jewelry has a small but loyal clientele, and it wants to further increase customer loyalty by creating a frequent buyer program. in this program, after every 10 purchases, a customer will receive a credit equal to 50 percent of the average of his or her 10 most recent purchases. this credit must be applied to the next (or 11th) purchase.

Asteel company sells some steel to a bicycle company for $100. the bicycle company uses the steel to produce a bicycle, which it sells for $200. taken together, these two transactions contribute