If the government finances an increase in government purchases with an increase in taxes, which of the following would you expect to see?
A) a decrease in the interest rate B) a decrease in aggregate demand
C) an increase in the exchange rate D) an increase in net exports
C
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The magnitude of the tax multiplier is smaller than the magnitude of the government expenditure multiplier because
A) a change in taxes does not change expenditures. B) an increase in taxes decreases expenditures. C) a decrease in government expenditure decreases tax revenue. D) a change in taxes does not change expenditures by as much as the same size change in government expenditure. E) a change in taxes creates additional induced taxes.
Exhibit 36-1 Bond FaceValueof Bond Price ofthe Bond Annual CouponPayment A $1,000 $850 $25 B $1,000 $950 $41 C $1,000 $1,100 $52 D $1,000 $1,100 $32 E $1,000 $1,000 $50 Refer to Exhibit 36-1. The yield on bond C is approximately
A. 0.05 percent. B. 5.2 percent. C. 4.7 percent. D. 100 percent.
Here is a consumption function: C = C0 + MPC(Yd). If consumption is $2,000, MPC =0.75, and disposable income is $2,000, what does autonomous consumption equal?
A) $950 B) $3,500 C) $500 D) $4,500 E) none of the above
Which of the following is not a component of M1?
A) currency held outside banks B) traveler's checks C) savings deposits D) checkable deposits