Over the long run, evidence on the size of the government spending multiplier is
A) estimated to be about 1.5 implying a high degree of effectiveness of spending
B) estimated to fall below 1.0 because increases in spending come with higher taxes and lower private
C) estimated to be greater than the short run government spending multiplier
D) estimated as the ratio of the unemployment rate to government spending per capita
Answer: B) estimated to fall below 1.0 because increases in spending come with higher taxes and lower private
You might also like to view...
In perfect competition, the demand faced by a single firm is perfectly
A. elastic, because many other firms produce the same standardized product. B. inelastic, because many other firms produce the same standardized product. C. inelastic, because the firm produces a differentiated product. D. elastic, because the firm produces a differentiated product.
Opportunity cost of an activity
a. Is included in accounting costs b. Does not include monetary costs c. May include both monetary costs and foregone incomes d. Is known with certainty
As firms exit a monopolistically competitive market, profits of existing firms ____ and product diversity in the market ____
a. decline; decreases b. rise; decreases c. rise; increases d. decline; increases
In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where
A. ATC < P, MR = MC = P. B. ATC = P, MR = MC < P. C. ATC < P, MR + MC < P. D. ATC = P, MR = MC = P.