"A country's expenditure multiplier is constant over time." Explain whether the previous statement is correct or incorrect
What will be an ideal response?
The statement is incorrect. The expenditure multiplier changes as marginal income tax rates change, as the marginal propensity to import changes, and as the marginal propensity to consume changes over time.
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Cartel agreements are difficult to sustain because:
A. it's usually easy to discover if one of the members has cheated. B. cartel members do not face the economic incentives inherent in a prisoner's dilemma. C. the collective payoff to all the cartel members is lower when they all abide by the cartel agreement. D. it's a dominant strategy for each cartel member to cheat on the cartel agreement.
When the government has a surplus, as occurred in the late 1990s, the ________ curve of bonds shifts to the ________, everything else held constant
A) supply; right B) supply; left C) demand; right D) demand; left
If an economy produces 3 million oranges that sell for $0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated:
A. oranges receive the same weight as cars. B. the market value of oranges is excluded. C. oranges receive a greater weight than cars. D. oranges receive a smaller weight than cars.
Extremely rapid rates of money growth are usually the result of:
A. sharp increases in productivity. B. rapid population growth. C. large government budget deficits. D. excessively high interest rates.