In an article regarding Bangladesh's economy, the author suggests that the government give tax breaks on investment dollars, research and development, and donations to educational institutions. Suppose the multiplier in Bangladesh is 2. As a result of enacting the proposed policies, which of the following describe possible outcomes in the short run?
I. A $20 billion increase in investment will increase aggregate expenditure by $40 billion
II. the AE curve will shift upward
III. there will be and unplanned increase in inventories
a) I, II, & III
b) I & II only
c) I & III only
d) II & III only
b) I & II only
You might also like to view...
The bowed out (concave) shape of the production possibilities curve implies that as production of one good
A) increases, society must forgo increasing amounts of another good. B) increases, production of other goods increases as well. C) decreases, production of other goods decreases as well. D) increases, society must forgo decreasing amounts of another good. E) increases, society can obtain a free lunch.
To assure a well-defined solution to the consumers' intertemporal choice problems, we must assume that consumers' preferences exhibit the properties that
A) consumers are all identical and that more is always preferred to less. B) more is preferred to less and that consumers prefer diversity. C) consumers like diversity and that more is sometimes preferred to less. D) more is sometimes preferred to less and that first-period consumption and second-period consumption are both normal goods.
Labor force participation is a guaranteed ticket out of poverty
Indicate whether the statement is true or false
If a nation repaid its debts by raising taxes, the main effect would be to:
a. Create a wildly inflationary environment. b. Contract the economy due to the decrease in the monetary base. c. Expand the economy due to the increase in the monetary base. d. Redistribute income if the debt was internally held and transfer spending abroad if it was externally held.