If the spending multiplier is 3 and the desired amount of increase in real GDP is $270 billion, then by how much would government spending have to increase?
a. $270 billion
b. $90 billion
c. $30 billion
d. $10 billion
b
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If the production of 2,000 cars and 500 tons of corn during a year is economically efficient for a country which produces only these two products, which of the following conclusions can be drawn?
a. It satisfies domestic demand completely. b. The production of cars can not be increased without reducing the production of corn. c. The reallocation of resources to change the production level must reduce production of both goods. d. It is possible to increase the production of both if resources can be reallocated.
Which of the following events will cause a downward movement along the value of marginal product of labor curve?
a. An increase in wage rate b. An increase in price of the product c. A decrease in wage rate d. A decrease in price of the product
Suppose an economy is initially in long-run equilibrium, and it then experiences a supply shock in the form of exceptionally high energy prices. Which of these will be true in this economy?
What will be an ideal response?
Irving Fisher argued for a tax on consumption instead of on income because
A. consumption is the best indication of ability to pay. B. the standard of living depends not on income, but on how much is consumed. C. a tax on consumption raises more revenue than a tax on income. D. a tax on income discourages saving by taxing savings twice.