Ignoring any supply-side effects, suppose the government is considering cutting taxes by $100 billion or increasing government expenditures on goods and services by $100 billion. Then
A) both policies would increase aggregate demand but the increase in government expenditure has a smaller effect.
B) the tax cut would increase aggregate demand and the increase in government expenditure would decrease aggregate demand.
C) the tax cut would decrease aggregate demand and the increase in government expenditure would increase aggregate demand.
D) both policies would increase aggregate demand by the same amount.
E) both policies would increase aggregate demand but the tax cut has a smaller effect.
E
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The figure above shows the market for airline tickets. In early 2008 firms negotiated lower wages with their workers. This change is shown in the figure as a shift from
A) D0 to D1. B) D1 to D0. C) S0 to S1. D) S1 to S0.
Which, if any, of the following causes a country's reported GDP to be less than its total economic production?
A) the exclusion of household production B) the exclusion of government transfers C) the inclusion of government expenditures D) None of the above cause reported GDP to be less than total production.
Refer to Figure 28-2. At which point is the unemployment rate equal to the natural rate of unemployment?
A) A B) B C) C D) There is insufficient information on the graph to answer this question.
Shelley wins $1 million in her state's lottery. If Shelley keeps working after she wins the money, we can infer that the substitution effect must exactly offset the income effect for her
a. True b. False Indicate whether the statement is true or false