The size of the expenditure multiplier is influenced by
i. the marginal propensity to consume.
ii. autonomous spending.
iii. the marginal tax rate.
A) i only B) ii only C) iii only D) i and iii E) ii and iii
D
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When investment increases, the multiplier points out that
A) consumption decreases by a greater amount. B) consumption increases by the same amount. C) real GDP increases by a greater amount. D) ultimately investment increases by more than the initial increase. E) real GDP decreases by a greater amount.
The reason that it is possible for the economy in the above figure to be at equilibrium point E2 rather than at equilibrium point E1 is that
A) in the long run there is always less than full employment. B) in the short run the economy can produce more than it can in a long-run situation. C) AD always shifts rightward and never shifts leftward. D) the economy must be in a recession.
Internalizing an externality makes _____
a. consumers pay a price that is equal to their private willingness to pay b. producers charge a price that is equal to the marginal cost of production faced by them c. the government tax a third party who has been affected by the externality d. market participants consider the costs of or benefits to other parties while making decisions
Because poverty is so pervasive, poor countries are not able to experience economic growth.
Answer the following statement true (T) or false (F)