A tax multiplier equal to –4.30 would imply that a $100 tax increase would lead to a
a. $430 decline in national income
b. $430 increase in national income
c. 4.3 percent increase in national income
d. 4.3 percent decrease in national income
e. 43 percent decrease in national income
A
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If the prices of goods begin to rise rapidly, people may find it difficult to maintain their lifestyles. Explain why
What will be an ideal response?
Banks create money whenever they
A) accept a deposit. B) lend excess reserves to a borrower. C) receive monthly payments on their loans. D) receive interest on existing loans.
Answer the following statements true (T) or false (F)
1. The difference between the ATC and the AVC must represent the AFC. 2. Average revenue is synonymous with price. 3. Marginal revenue is the increase in total revenue per additional unit of input. 4. Average revenue times total output equals total profit. 5. Marginal product can never fall below zero.
Markets fail when externalities are present
a. because all of the costs and benefits of producing a good are reflected in the market price b. because some of the costs and benefits of producing a good are not reflected in the market price c. only if they are negative; positive externalities are not market failures d. because profits are not maximized e. if the positive externalities are less than the negative externalities