Which of the following best explains why equilibrium income will rise by more than $100 in response to a $100 increase in government spending?
A) incomes will rise resulting in a tax decrease
B) incomes will rise resulting in higher consumption
C) The increased spending raises the aggregate price level
D) The increased spending increases the money supply, lowering interest rates
E) The higher budget deficit reduces investment
Answer: B) incomes will rise resulting in higher consumption
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Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is
A) independent of the units of measurement. B) dependent on the units of measurement. C) easier to calculate. D) harder to calculate. E) always negative whereas the slope is always positive.
The short run:
A. means the firm cannot increase or decrease at least one of its inputs. B. means that output cannot be changed. C. means the price of output is fixed. D. All of these are true.
Owners of corporations are referred to most frequently as
a. entrepreneurs b. lien holders c. limited partners d. managers e. stockholders
When Brazil can generate a product using fewer labor hours and resources than the United States, an economist would say that Brazil had:
a. a comparative advantage in production of the product. b. an absolute advantage in production of the product. c. a higher opportunity cost of producing the product. d. no incentive to import the product, regardless of the cost-price conditions for other products.