Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change
a. Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending—the multiplier effect.
b. The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates.
c. The higher interest rates make borrowing more costly and reduce investment spending—the crowding-out effect.
d. All of the above
d
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The annual colonial trade deficit (which equaled 20,000-40,000 pounds sterling in 1768-1772) was mostly financed by:
a. an outflow of specie. b. paper money. c. short-term credit from England. d. payments made by a few very wealthy colonists.
When a bank needs to increase its reserves, it will
a. call in all its loans b. stop paying interest on its saving accounts c. borrow money from the government d. call in a loan or reduce new lending e. increase the number of loans it makes
As long as marginal cost is below marginal revenue, a perfectly competitive firm should:
A. hold production constant. B. decrease production. C. increase production. D. reconsider past production decisions.
Which of the following is included in GDP calculations?
a. the college tuition paid to enroll in a course b. a check for $50 received on your birthday c. cash income received by a self-employed landscaper that is not reported to the IRS d. sales revenue received from a yard sale