If MPC = 0.80, MPS must be ______ and the income multiplier is ______
a. 1.20; 4
b. 0.20; 5
c. 1.80; 4
d. 0.25; 5
e. 0; 10
B
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A $100 million decrease in government expenditure on goods and services leads to an even larger decrease in aggregate demand because of
A) induced changes in consumption expenditures. B) automatic fiscal policy. C) induced changes in aggregate supply. D) discretionary fiscal policy. E) the reinforcing effect of monetary policy.
The Great Depression consisted of how many business cycles?
A) 1 B) 2 C) 3 D) 4
The marginal revenue product sets an upper limit to the wage rate an employer will pay.
Answer the following statement true (T) or false (F)
Our ability to manage Social Security as a "pay-as-you-go" program (in which taxes collected from those currently working are used to make benefits payments to those currently retired) is impaired when the number of retirees per worker increases. The current concern about the stability of Social Security is based primarily on projections that there will many more retirees per worker as the baby boomers continue to retire. Then, if we want to maintain a pay-as-you-go system, we can:
A. raise payroll taxes to ease the burden on those currently working. B. lower payroll taxes to compensate for the increase in the number of retirees. C. lower payroll taxes to ease the burden on those currently working. D. raise payroll taxes to compensate for the increase in the number of retirees.