Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?
A) an increase of less than $80 billion
B) an increase equal to $80 billion
C) an increase of greater than $80 billion
D) a decrease of less than $80 billion
E) a decrease of more than $80 billion
Answer: D
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The Social Security tax is considered to be a
A) regressive tax. B) progressive tax. C) proportional tax. D) marginal tax.
Which of the following statements is not correct?
a. Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits. b. The Earned Income Tax Credit (EITC) is very similar to a negative income tax. c. Minimum wage laws will likely increase unemployment. d. The elderly are more likely to be poor than single mothers.
Marginal cost pricing implies a loss on every unit of output produced by natural monopoly.
Answer the following statement true (T) or false (F)
The federal funds rate is the interest rate that ________ charge(s) ________.
A. banks; their best corporate customers B. the Fed; commercial banks C. banks; on federal student loans D. banks; other banks