If the tax multiplier is -4 and taxes are reduced by $35 billion, output
A. falls by $8.75 billion.
B. falls by $140 billion.
C. increases by $8.75 billion.
D. increases by $140 billion.
Answer: D
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How are most fundamental economic decisions now determined in China?
A) The government decides because China is a centrally planned economy. B) Individuals, firms, and the government interact in a market to make these economic decisions. C) The United Nations decides because China is a developing economy. D) These decisions are made by the country's elders who have had much experience in answering these questions.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases B. remains constant. C. initially increases, then decreases. D. decreases.
The government spending multiplier is likely to be larger during periods of
A. high output and low unemployment. B. low output and high unemployment. C. low output and low unemployment. D. high output and high unemployment.
Assuming that labor is the only variable input, if society values a good ________ it costs firms to hire the workers to produce that good, the good ________ be produced.
A. equal to what; will not B. more than; will not C. more than; will D. less than; will