In order to maintain a balanced budget, Congress has decided to cut taxes and government spending both by $25 billion. What will happen to GDP?
a. It will increase.
b. It will remain the same.
c. It will decrease.
d. It's impossible to know without the multiplier.
c
You might also like to view...
Externalities can occur as a result of either production or consumption activities
a. True b. False
Entry barriers can lead to long-run economic profits
a. True b. False Indicate whether the statement is true or false
For a monopolist, the market demand curve:
A. is equal to the monopolist's MR curve. B. is not important, since the monopolist is the only producer. C. must be horizontal. D. is also the demand for the monopolist's product.
The expectations hypothesis cannot explain why:
A. short-term yields are more volatile than long term yields. B. yields on securities of different maturities move together. C. yield curves usually slope upward. D. long-term bonds usually are less liquid than short-term bonds with the same default risk.