So we can see that an increase in government spending will raise the level of economic equilibrium, while a decrease in government spending will lower it
What will be an ideal response?
The multiplier effect, which is the same size in both directions, gives the policy extra "bang for the buck"—in this case, a change in government spending leads to five times as great a change in national income
You might also like to view...
In the figure above, if a tax of $2 per widget is imposed on sellers, then the price of widgets paid by the buyer will be
A) more than or equal to $8. B) between $8 and $6. C) $6. D) less than $6.
How many units should the profit maximizing firm produce?
a. 1 b. 2 c. 3 d. 4
According to the World View article titled "The Way We Give: Philanthropy Can Step In Where Market Forces Don't," in which of the following ways does philanthropy not improve the market outcome?
A. Make novel arrangements with private companies. B. Draw in experts including universities. C. Give awards. D. Require firms to research new and improved health care solutions.
People demand more of product X when the price of product Y decreases. This means X and Y are:
a. Substitutes b. Complements c. Both inexpensive d. Not related