If MPC = 0.8, a $200 billion increase in government purchases would have what size effect on the "first round" of induced added consumption, and what total effect on AD?
a. increase "first round" consumption by $80 billion; increase AD by $400 billion
b. increase "first round" consumption by $160 billion; increase AD by $1 trillion
c. increase "first round" consumption by $200 billion; increase AD by $1 trillion
d. increase "first round" consumption by $800 billion; increase AD by $4 trillion
b
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If economic fluctuations originate on the supply side,
A. there will be no relationship between unemployment and inflation. B. real wage increases will be necessary to eliminate unemployment. C. inflation and unemployment will be negatively related. D. inflation and unemployment will be positively related.
The famous "Kennedy Tax Cut" of 1964 was
(a) meant to stimulate private spending. (b) meant to reduce private investment. (c) meant to restrain consumption. (d) designed to increase the federal deficit.
The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was
a. $1.25 billion at an annual rate. b. $4 billion at an annual rate. c. $5 billion at an annual rate. d. $20 billion at an annual rate.
Sometimes, the taxes with the smallest excess burden are
A. progressive. B. regressive. C. proportional. D. digressive.