In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPS is 0.25, then it could:
A. Increase taxes by $16 billion
B. Increase taxes by $24 billion
C. Decrease government spending by $10 billion
D. Decrease government spending by $16 billion
A. Increase taxes by $16 billion
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Free trade will affect a country's employment in different industries
Indicate whether the statement is true or false
If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is
A) proportional. B) unfair. C) progressive. D) regressive.
Refer to Figure 23-3. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?
A) $9 million B) $10 million C) $90 million D) $100 million
Suppose that the reserve ratio is 5%. What is the value of the potential money multiplier?
A) 2 B) 5 C) 10 D) 20