A tax cut has a smaller impact on aggregate demand than an increase in government purchases of the same size because
A. A portion of the tax cut is saved.
B. A portion of the tax cut is invested.
C. The tax cut multiplier is equal to 1.
D. Tax cuts do not increase disposable income.
Answer: A
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Because a decrease in real autonomous spending results in a ________ in the price level, the ultimate effect on real GDP is ________ than predicted by the multiplier
A) fall; larger B) fall, smaller C) rise; smaller D) fall; smaller
If this year the price level is 135 and last year it was 125, the inflation rate is
A) 8 percent. B) 10 percent. C) 12 percent. D) none of the above.
Featherbedding refers to
A) training programs initiated by the unions to make the less-skilled workers more productive. B) attempts by management to reduce workers' interest in a union. C) the practice that forces employers to use more labor than they would otherwise. D) the amount of the union premium.
Which of the following pairs of goods would be considered complementary?
a. Coca-Cola and Pepsi b. computers and computer software c. radios and televisions d. mass transit and private automobiles e. compact discs and cassette tapes