Suppose the government spends $5,000 per person this year. The market for borrowing and lending is competitive, and the market interest rate is 6%. Which of the following plans to finance the government's spending is best for consumers?
a. A tax of $5,000 per person this year.
b. A tax of $5,300 per person next year.
c. An annual tax of $300 per person forever.
d. All of the above plans have the same effect on consumers.
d. All of the above plans have the same effect on consumers.
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Which of the following is NOT a part of the income approach to determining GDP?
A) rental income B) gross private domestic investment C) net interest D) indirect business taxes
Which of the following is a potential result of a price ceiling?
A) excess supply B) long lines C) higher quality output D) higher marginal costs
Suppose a computer manufacturer purchases a $100 case from a supplier, a $300 computer chip from another supplier, and sells the computers for $1000 . How much did the company contribute to GDP?
a. $1000 b. $900 c. $700 d. $600 e. $400
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary