If the MPC increase, the equilibrium levels of income and consumption will change in which of the following ways?
A) No change/No change
B) No change/Increase
C) Increase/No change
D) Increase/Increase
E) Decrease/Decrease
Ans: D) Increase/Increase
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Which of the following statements about tariffs is true?
A. The revenue gained from tariffs equals the total cost that tariffs impose on consumers. B. The costs of tariffs are proportionately higher for high-income groups than for low-income groups. C. U.S. consumers lose more from tariffs than U.S. producers gain. D. U.S. producers gain more from tariffs than U.S. consumers lose.
Negative income taxes have been a feature of our tax system since President Lyndon Johnson's "war on poverty" in the 1960s
Indicate whether the statement is true or false
If the crowding-out effect is at its maximum strength, it follows that an increase in government spending would:
A. Cause aggregate demand and GDP to increase B. Cause aggregate demand and GDP to decrease C. Not affect aggregate demand and GDP D. Not cause the budget deficit to increase
When a shift in aggregate demand occurs, the effect will be divided between a change in output and a change in price level. How the effect is divided depends on the
a. amount of inflation in the economy. b. slope of the SRAS curve. c. size of the multiplier. d. position of the AE curve. e. slope of the AD curve.