Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?
A) a decrease of more than $80 billion
B) an increase of less than $80 billion
C) an increase equal to $80 billion
D) an increase of greater than $80 billion
E) a decrease of less than $80 billion
E
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Gross domestic product includes
a. all intermediate and final goods and services produced. b. the current production of final goods and services with a country's borders. c. exchanges of assets. d. the current production of final goods and services by a country's citizens. e. All of the above
The quantity demanded is always equal to the quantity supplied
Indicate whether the statement is true or false
Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on
a. aggregate supply. b. tax receipts. c. aggregate demand. d. the money supply.
Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?
a. 15 percent b. 32 percent c. 40 percent d. 55 percent