A tax reduction of a specific amount will be more expansionary the:
A. smaller is the economy's MPC.
B. larger is the economy's MPC.
C. smaller is the economy's multiplier.
D. less is the economy's built-in stability.
B. larger is the economy's MPC.
You might also like to view...
The above figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What is the opportunity cost of increasing the production of rice to 12 tons?
A) 6 thousand bottles of wine B) 9 thousand bottles of wine C) 15 thousand bottles of wine D) 12 tons of rice E) Nothing, it is a free lunch.
The transactions that take place in the financial markets:
A. can be very complex. B. are very simple. C. are always to the buyer's advantage. D. are always to the seller's advantage.
Comparing monetary and fiscal policy:
A. monetary policy is easier to implement. B. history has shown fiscal policy to be more effective at stabilization. C. fiscal policy has an advantage because it is faster to implement than monetary policy. D. fiscal policy is easier to implement.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.