Congress is debating whether to raise taxes by $100 billion or decrease spending by $100 billion in order to eliminate a budget deficit. Which action will have the larger effect on equilibrium GDP?
a. the increase in taxes
b. the decrease in spending
c. the effects will be equal
d. not possible to determine without knowing the multiplier
b
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What do you think would be the Cobb-Douglas single best prescription for poor countries to catch up with the rich?
A) to increase their stock of capital B) to increase their labor force C) to find more efficient ways to allocate and use capital and labor D) to ask help of the rich countries E) none of the above
If each player has a dominant strategy, then those strategies make up the Nash equilibrium
What will be an ideal response?
If inflation is higher than expected, then lenders receive interest payments whose real values are less than they expected
a. True b. False Indicate whether the statement is true or false
The key to a successful positive signal is that:
A. it is hidden information. B. it builds trust between the principal and the agent. C. it is costly to fake. D. All of these statements are true.