Assume that taxes depend on income. The MPC is 0.8 and t is 0.4. If government purchases increase by $100 billion, the equilibrium level of output will increase by
A. $16.7 billion.
B. $57.5 billion.
C. $192.31 billion.
D. $215.9 billion.
Answer: C
You might also like to view...
For a risk-averse individual, as wealth increases, total utility ________ and marginal utility ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
If the Fed follows a policy of fixed exchange rates, an undervalued dollar will force the Fed to
a. conduct open market purchases. b. raise the discount rate. c. raise the required reserve ratio. d. cut taxes or raise government spending.
Expected value is:
A. the average of each possible outcome of a future event, weighted by its probability of occurring. B. the average probability of all possible outcomes of a future event occurring, weighted by each possible outcome individually. C. the sum of all probabilities of all possible outcomes of a future event occurring. D. None of these statements is true.
U.S. nominal GDP: a. has historically increased more slowly than real GDP. b. has historically increased more rapidly than real GDP. c. includes an estimate of the value of leisure time
d. includes an estimate of underground productive activity.