If full-employment income and equilibrium income are equal for a country, then a tax cut will result in
A. Leakages exceeding injections.
B. Output exceeding desired expenditure.
C. Excess AD.
D. Undesired inventory accumulation.
Answer: C
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In 2010, in order to stimulate capital investment, President Obama proposed
a. a reduction in real interest rates. b. an increase in the money supply. c. increased write-offs for businesses purchasing equipment. d. an increase in the tax on capital gains.
Say the economy is at its potential income at $8 trillion and the deficit is $200 billion. The structural deficit:
A. is $200 billion. B. could be more than $200 billion. C. could be less than $200 billion. D. cannot be determined from the given information.
If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her opportunity cost of one gallon of beer is 4 gallons of wine.
Answer the following statement true (T) or false (F)
The Federal Reserve System controls the money supply by ________.
A. making loans to private borrowers B. changing the amount of reserves the banking system has available C. making loans to the Treasury D. issuing currency