If the tax multiplier is -4, the MPS is
A. 0.2.
B. 0.3.
C. 0.4.
D. 0.5.
Answer: A
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If the Federal Reserve lowers the required reserve ratio, people will end up taking out ________ because the interest rates ________
A) more loans; will rise B) the same number of loans; will not change C) more loans; will fall D) fewer loans; will rise E) fewer loans; are controlled by the economic conditions alone
If a bank receives a $7,500 deposit and the required reserve ratio is 20%, how much of this deposit can be loaned out?
a) $1,500 b) $2,000 c) $6,000 d) $7,500
Conducting expansionary monetary policy when the economy is at its long-run equilibrium causes the Phillips Curve to:
A. shift straight down. B. become less steep. C. shift straight up. D. become more steep.
Free exit implies that
A. a perfectly competitive firm can never earn a profit. B. the government regulates the number of firms it allows in an industry. C. firms will always earn below normal profit, as firms can exit the industry at any time they like. D. if an industry's existing firms make excessively high losses, firms are likely to exit the industry.