The balanced-budget multiplier is calculated as the government spending multiplier minus the tax multiplier
Indicate whether the statement is true or false
FALSE
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
A good or service with a positive externality is one which ______
A. everyone wants to have access to B. is produced in the social interest C. the marginal social benefit exceeds the marginal private benefit D. the marginal external benefit exceeds the marginal private benefit
Refer to the following graph. A decrease in supply is reflected as
a. a shift of the supply curve from S to S2.
b. a shift of the supply curve from S to S1.
c. a shift of the supply curve from S2 to S1.
d. a change in the quantity supplied from 5.2 to 8.2 million minutes when price is $12.50.
If the price elasticity of demand for a good is less than one in absolute terms, we say consumers of this good
A) are not very sensitive to price. B) are not very sensitive to the quantity they demand. C) are very sensitive to price. D) are elastic.