If the MPC in an economy is 0.8, government could close a recessionary expenditure gap of $100 billion by cutting taxes by
A. $100 billion.
B. $125 billion.
C. $80 billion.
D. $200 billion.
Answer: B
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"When the Fed buys securities from a bank, the quantity of money eventually decreases by a fraction of the initial change in the monetary base." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
Compared to perfect competition, a monopoly usually does not result in
a. higher prices. b. the use of fewer resources. c. a less elastic demand curve. d. less profit.
All of the following are characteristics of monopolistic competition EXCEPT
A) a few firms dominate the industry. B) product differentiation. C) many firms in the industry. D) advertising.
Any value of the money supply chosen by the Federal Reserve implies a specific value for ________.
A. government purchases B. potential output C. the budget deficit D. the nominal interest rate