The government spending multiplier is equal to the tax multiplier
Indicate whether the statement is true or false
FALSE
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Which of the following is true regarding the measurement of GDP?
A) Wages and profit income are used in the income approach to GDP. B) Wages and consumption are used in the expenditure approach to GDP. C) Consumption and investment are used in the income approach to GDP. D) Government expenditure is only counted in the income approach to GDP. E) Investment and wages are expenditures, and are therefore are used in the expenditure approach to GDP.
Suppose a bond promises to pay its holder $100 a year forever. The interest rate on the bond rises from 4 percent to 5 percent. The price of the bond
A) falls from $2,500 to $2,000. B) does not change because it is not affected by the interest rate. C) falls from $25,000 to $20,000. D) rises from $2,000 to $2,500.
The gap between consumption and income can never be particularly large
Indicate whether the statement is true or false
Normative economics concerns
a. analysis of social and economic norms b. statements of fact c. the analysis of what is d. the study of what ought to be e. value-free judgments