If government purchases are increased by $100, taxes are reduced by $100, and the MPC is 0.8, equilibrium output will change by
A. -$400.
B. $900.
C. $1,800.
D. an amount that cannot be determined from this information.
Answer: B
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With a rise in the stock market, the simple LCH model with no bequests predicts ________ in current consumption. Then when adding to the model bequests due to catastrophic illnesses and expenses that fail to occur, current consumption is ________
A) a fall, still predicted to fall B) a fall, predicted to rise C) no change, predicted to rise D) a rise, still predicted to rise E) a rise, predicted to remain unchanged
The law of demand (downward-sloping demand curve)is based on the idea of
a. maximum total utility b. minimum marginal utility c. total utility divided by quantity of the good consumed d. law of diminishing marginal utility e. consumers minimize total utility
A major difference between tariffs and import quotas is that
a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. d. All of the above are correct.
The total burden of a tax is the
A. absolute number of dollars an individual pays. B. percentage of income a person pays. C. number of dollars a person must be given after taxation to make him as well off as he was before taxation. D. revenue lost to loopholes.