An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.75. By how much should the government raise taxes to achieve its objective?
A. $6 billion
B. $9 billion
C. $12 billion
D. $16 billion
C. $12 billion
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Refer to Figure 4-6. What area represents producer surplus at the equilibrium price of P1?
A) A + B + C + D + E B) A + B + D C) D + E D) D + E + G + H
In a competitive market, if the production process involves an external benefit, the market will
a. produce the economically efficient outcome. b. result in a market price that is higher than the efficient one. c. result in a market price that is lower than the efficient one. d. result in too much of the good being produced compared to the ideal efficient outcome.
In foreign exchange markets, who demands dollars and who supplies dollars?
What will be an ideal response?
Consider a market that is in equilibrium. If it experiences both an increase in demand and an increase in supply, what can be said of the new equilibrium? The equilibrium:
A. price and quantity will both fall. B. price and quantity will both rise. C. price will definitely rise, while the equilibrium quantity cannot be predicted. D. quantity will definitely rise, while the equilibrium price cannot be predicted.