Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000, consumption is
A. $90,250.
B. $85,000.
C. $70,000.
D. $67,500.
Answer: D
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According to structural stagnationists there is an argument to be made that the Fed should return to standard monetary policy.
Answer the following statement true (T) or false (F)
Fiscal policy is defined as
A) the discretionary changing of government expenditures and/or taxes to achieve national economic goals. B) the design of a tax system to transfer income from the rich to the poor. C) the use of the taxing power of the government to redistribute wealth in a socially acceptable manner. D) the use of Congressional power to pursue social and political goals.
What happens to the price of bonds when the Fed is selling bonds? What happens to the interest rate? What happens to the money supply?
What will be an ideal response?