What would happen to an economy if the government funded an increase in spending with an equivalent increase in taxes?
What will be an ideal response?
Because the government spending multiplier is larger than the tax multiplier, if government spending and taxes increase by equal amounts at the same time, GDP will increase. The multiplier for equal changes in government spending and taxes is called the balanced-budget multiplier, because these equal changes will not unbalance the budget. The balanced budget multiplier is always equal to one, so if government spending and taxes are both increased by the same amount, the GDP will increase by the amount of the increase in government spending.
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Which figure above shows the effect of a decrease in the number of pizza sellers?
A) Figure A B) Figure B C) Figure C D) Figure D E) Both Figure B and Figure C
The index used for international price comparisons is the:
A. World Bank's International Comparison Program index. B. World Bank's World Price Index. C. United Nations' World Consumer Price Index. D. World Trade Federation's International Price Index.
Sellers have a strong incentive to lobby government for legal restrictions that would reduce the intensity of competition in their market because
a. the firms wish to be more efficient than competition will permit. b. competition tends to result in lower prices and lower profits. c. legal restrictions that lessen competition in a market generally benefit consumers. d. the firms fear that intense competition will lead to higher profits that will attract additional rivals into the market.
Over time, housing shortages caused by rent control
a. increase, because the demand for and supply of housing are less elastic in the long run. b. increase, because the demand for and supply of housing are more elastic in the long run. c. decrease, because the demand for and supply of housing are less elastic in the long run. d. decrease, because the demand for and supply of housing are more elastic in the long run.