When the government reduces income taxes, it is trying to stimulate which of the following components of GDP?
A. Gross investment
B. Government purchases
C. Consumption
D. Net exports
Answer: C
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The MPC is 0.90 and there are no income taxes or imports. If government expenditures on goods and services increases by $2.0 billion, after the multiplier effect works out, aggregate expenditure increases by
A) $2.22 billion. B) $2.0 billion. C) $10 billion. D) $20 billion. E) $1.8 billion.
The figure above shows the cost, marginal revenue, and demand curves of Golden Chow, a producer of dog food. The market for dog food is monopolistic competition. In the short run, Golden Chow sells 400 cans of dog food per day and makes ________
Other firms have ________ incentive to enter the industry. A) an economic profit of $200 a day; an B) an economic profit of $400 a day; an C) a normal profit of $200 a day; no D) an economic profit of $400 a day; no
If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is
A) 2. B) 5. C) 10. D) 20.
Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumer's choice?
A) 5 Beer, 5 Pizza B) 0 Beer, 25 Pizza C) 25 Beer, 15 Pizza D) None of the bundle will be chosen.