The result of the balanced budget multiplier is that aggregate demand changes by the amount of the change in:
a. government spending.
b. tax revenue.
c. government spending plus tax revenue.
d. government spending minus tax revenue.
a
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The expenditure multiplier is larger than one because
A) an increase in autonomous expenditure induces further increases in aggregate expenditure. B) an increase in autonomous expenditure brings about a reduction in the real interest rate. C) additional expenditure induces lower incomes. D) an increase in autonomous expenditure induces further decreases in aggregate expenditure. E) the price level rises, thereby reinforcing the initial effect.
Which of the following countries' economic development began with government encouragement of cartel formation?
a. United States b. Israel c. Brazil d. Germany e. Canada
When individuals and businesses are permitted to trade freely over a larger market area,
a. wages will decline to the level of the poorest country in the region. b. the monopoly power of business firms will increase. c. they will be able to produce a larger output and consume a more diverse bundle of goods. d. businesses will be able to earn higher profits, but the income levels of individuals will decline.
Figure 16-1
In Figure 16-1, there are four levels of income. G is government expenditures and TT is taxes less transfers. At which level of income does the official budget produce a surplus?
a.
Y4
b.
Y3
c.
Y2
d.
Y1