The tax multiplier is equal
What will be an ideal response?What will be an ideal response?
to ?Y/?×T = -(mult)(mpc). Mathematically, (mult)(mpc) always works out to exactly 1.0 less than the regular multiplier. (You can use the multiplier formula from Chapter 9 to work out why this is true.) Using the figures from our previous example, where mpc = 0.8 and mult = 5, the tax multiplier would be -(0.8) 3 5 = -4. (For a more detailed algebraic account of the tax multiplier for a lump sum tax, see Appendix A1.) (chapter 10 page 233)
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Which of the following is false?
A. The U.S. has had twelve recessions since January 1945. B. The U.S. has had a great deal of stagflation in the 1970s. C. The U.S. has not had a depression since the 1930s. D. The U.S. had rising inflation all throughout the 1990s.
Explain briefly PPP and IRP. Why might the latter hold better than the former over time?
What will be an ideal response?
If the government enacts contractionary fiscal policy, it:
A. must want to slow economic activity. B. could increase taxes. C. expects aggregate demand to decrease. D. All of these are true.
Voluntary programs for reducing pollution
A. have been more successful in the United States in encouraging recycling than any other type of program. B. are most appropriate when surveillance and enforcement are impractical. C. work most reliably when voluntary reduction of pollution over a long period is encouraged. D. are enforced by legal authority.