The break-even point on the consumption function represents the point where
A. consumption is zero.
B. income equals consumption plus spending.
C. consumption equals income.
D. consumption equals spending.
Answer: C
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When the government levies a $100 million tax on people's income and puts the $100 million back into the economy in the form of a spending program, such as new interstate highway construction, the:
a. tax, then, generates a $100 million decline in real GDP. b. level of real GDP expands by $100 million. c. effect on real GDP is uncertain. d. tax multiplier overpowers the income multiplier, triggering a rollback in real GDP.
For an inferior good:
a. the income elasticity is positive. b. the income elasticity if negative. c. the income elasticity is zero. d. the income elasticity is unity.
A less developed country can increase its capital stock by
a. raising taxes on purchases of capital goods b. temporarily accepting unusually high unemployment rates c. reducing government spending d. shifting resources away from production of consumer goods and toward production of capital goods e. providing more opportunities for individuals to spend their accumulated savings
In the United States each year, approximately
a. 50% of all businesses fail. b. 25% of all businesses fail. c. 10% of all businesses fail. d. 5% of all businesses fail.