Describe the differences (in sign and relative magnitude) between the government purchases multiplier and the tax multiplier
What will be an ideal response?
First, changes in government purchases affect GDP in the opposite direction as changes in taxes. As a result, the government purchases multiplier is positive, and the tax multiplier is negative. Second, the government purchases multiplier is larger in magnitude than the tax multiplier. This means that a dollar change in government purchases will have a larger effect on GDP as compared to a dollar change in the taxes.
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When marginal cost exceeds marginal revenue,
A. marginal profit < 0. B. the firm should increase output. C. marginal profit + marginal cost > marginal revenue. D. marginal cost < marginal revenue - marginal profit.
Economists assume that when there is a change in supply and/or demand, the market clearing price returns to the equilibrium
A) quickly. B) slowly. C) after a protracted negotiation process. D) after an adjustment period.
You own stock worth an estimated $1 million in the LPL corporation. In addition, you have personal assets worth another $2 million. LPL becomes insolvent, with debts exceeding assets by $15 million. Your personal wealth will decline by
a. $0 b. $1 million c. $1.5 million d. $3 million e. your proportion of the total outstanding stock shares times $15 million
Which of the following is correct?
A. SMC = PMC - MD B. MPB = MSB + MEB C. SMC = PMC + MD D. MSC = MPB E. MSB = MSC + MPB