Which of the following statements is incorrect?
A. Given the economy's MPS, a $15 billion reduction in government spending will reduce the
equilibrium GDP by more than would a $15 billion increase in taxes.
B. Other things unchanged, a tax reduction of $10 billion will increase the equilibrium GDP by
$25 billion when the MPS is .4.
C. If the MPC is .8 and GDP has declined by $40 billion, this was caused by a decline in
aggregate expenditures of $8 billion.
D. A government surplus is anti-inflationary; a government deficit is expansionary.
B. Other things unchanged, a tax reduction of $10 billion will increase the equilibrium GDP by
$25 billion when the MPS is .4.
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In the bond market, the buyer is considered to be
A) the lender. B) the borrower. C) the lender or the borrower, depending upon the use to which the funds are put. D) the lender or the borrower, depending upon whether interest rates are rising or falling.
The price of bonds and the interest rate are
A) inversely related. B) positively related. C) unrelated. D) related, but we are not sure how.
If the aggregate supply is ________, an increase in the price level does not change the unemployment rate.
A. positively sloped B. horizontal C. negatively sloped D. vertical
An example of a government organization involved primarily in public regulation or industrial regulation of natural monopolies would be the:
A. Food and Drug Administration B. Environmental Protection Agency C. Federal Energy Regulatory Commission D. Occupational Safety and Health Administration