Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.
Figure 24.5Refer to Figure 24.5. If the economy is in equilibrium and the government decreases spending by $100 billion, equilibrium aggregate output decreases to $________ billion.
A. 1,500
B. 1,400
C. 1,200
D. 800
Answer: C
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If all prices and income change by the same proportion:
A. the budget line shifts out. B. the budget line shifts in. C. the budget line rotates outward. D. the budget line doesn't change.
The main purpose of the Laffer curve is to crudely suggest
A. how government can increase tax revenues by increasing tax rates. B. that a tax cut will lead to an increase in GDP. C. the disincentive effects of high marginal tax rates. D. the tax rate which will yield maximum revenue for the government.
The market demand is the:
A. horizontal sum of all individual demand curves in a market. B. horizontal sum of all individual prices in a market. C. sum of all individual demand curves and supplies in a market. D. vertical sum of all individual demand curves.