In a country without foreign trade and income taxes, if the government decreases autonomous spending and autonomous taxes by 50 then total expenditures and output will
A) increase by 50 if the MPC is 1.
B) decrease by 50 for any value of the MPS greater than zero.
C) decrease by 100 if the MPS is 0.5.
D) increase by 200 if the MPS is 0.25.
B
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A "easy" money, tight "fiscal" policy combination will be preferred by society which values
A) low growth rates, but more goods and services in the future. B) public goods today greater than private goods in the future. C) private goods today more than public goods in the future. D) public and private goods in the future more than public and private goods today.
Carefully explain if the following statements are true, false, or uncertain
a. If average cost is increasing, marginal cost must be increasing. b. If there are diminishing returns, the marginal cost curve must be positively sloped. c. Marginal costs decrease as output increases because the firm can spread fixed costs over more units.
Which of the following is most likely to occur when the marginal revenue product of capital increases? a. The price of the product in which capital is used as a resource decreases. b. The equilibrium rental rate for capital increases
c. The demand for labor as a resource increases. d. The demand curve for capital shifts to the left.
The state of Florida is considering putting an excise tax on either good X or good Y. An economist discovers the supply of good X is more elastic than the supply of good Y, while the demand elasticities are identical. Which good should Florida tax in order to minimize the deadweight loss of the tax?