For this reason, the multiplier effects of changes in taxes and transfer payments are smaller than the multiplier impacts of government spending.
What will be an ideal response?
g. If taxes are "lump sum"—that is, set at a fixed level that does not change with income, then we can write T = ×T. The tax multiplier for a lump sum tax works in two stages. In the first stage, consumption is reduced by mpc (?×T), which can be expressed as: ?C = - (mpc) ?×T In the second stage, this reduction in consumption has the regular multiplier effect on equilibrium income. The combined effect can be expressed as: ?Y = (mult) ?C = - (mult) (mpc) ?×T chapter 10 page 232
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Which of the following statements is true?
A) Arithmetic or geometric growth rates gives similar answers for long periods. B) Using either arithmetic or geometric average to compute average growth rates gives similar answers for short periods. C) Geometric average of growth rate ignores the exponential nature of growth. D) Arithmetic calculation of growth rate considers the exponential nature of growth.
During a recession, output declines result in
A) lower unemployment in the economy. B) higher unemployment in the economy. C) no impact on the unemployment in the economy. D) higher wages for the workers.
List five factors that will cause the MP curve to shift. Explain what needs to happen to each of these factors to cause the MP curve to shift upward and to shift downward
What will be an ideal response?
A person is dynamically inconsistent if:
A. lapses in self-control occur. B. he does not always follow through on his plans and intentions. C. he changes his ranking of alternatives available at some future date as the date approaches or once it arrives. D. All of these are sufficient for dynamic inconsistency.