Assume that the full-employment level of output is $500, and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $450 and at the price level of 100 current aggregate demand is $410. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.75, then it should
A. reduce taxes by $30.
B. increase taxes by $30.
C. reduce taxes by $90.
D. increase taxes by $90.
Answer: A
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One objection to the notion of Ricardian Equivalence is that ________
A) households will recognize that a tax cut today will only lead to a tax increase in the future B) individuals are short-sighted in their spending decisions C) borrowing constraints have largely been eliminated due to financial innovation in the provisioning of consumer credit D) households typically save most of the monies received from a tax cut
Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as
a. an inward shift of the curve. b. a movement from one point to another point along the curve. c. an outward shift of the curve. d. a movement from a point on the curve to a point inside the curve.
The Economic Freedom of the World index is a measure of the consistency of a nation's institutions and policies with
a. political democracy. b. economic freedom. c. an Egalitarian distribution of income. d. economic nationalism.
Are economic growth and progress synonymous? How might they differ?
Please provide the best answer for the statement.