Mathematically, the value of the tax multiplier in terms of the marginal propensity to consume (MPC) is given by the formula:
A. MPC ? 1.
B. (MPC ? 1) / MPC.
C. 1 / MPC.
D. 1 ? [1 / (1 ? MPC)].
Answer: D
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The uncertainty costs of inflation cause ________ because ________
A) a decrease in investment and slower growth; people focus on the long run and not the short run B) an increase in investment and faster growth; people focus on the short run and not the long run C) a decrease in investment and slower growth; people increase their demand for money D) a decrease in investment and slower growth; people focus on the short run and not the long run E) an increase in investment and faster growth; people decrease their demand for money
During spring break, students have an elasticity of demand for a trip to Cancun, Mexico, of ?4. How much should an airline charge students for a ticket if the price it charges the general public is $420? Assume the general public has an elasticity of ?2.
A. $280 B. $160 C. $210 D. $105
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.
Explain the purpose of payroll taxes. Is it a proportional form of tax?