A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:
A. government spending is more employment-intensive than is either consumption or
investment spending.
B. government spending increases the money supply and a tax reduction does not.
C. a portion of a tax cut will be saved.
D. taxes vary directly with income.
C. a portion of a tax cut will be saved.
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
What is the relationship between the gross domestic product of a country and the level of life satisfaction in the country?
What will be an ideal response?
Other things constant, political instability in a poor nation tends to reduce
A) the money supply of the nation. B) the rate of return required to attract foreign investment. C) the level of foreign investment in the nation. D) interest rates in the nation.
The type of unemployment created by the normal rate of reentry and entry into the labor force is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.