The tax multiplier equals the change in ________ divided by the change in ________
A) consumption spending; taxes B) taxes; consumption spending
C) taxes; equilibrium real GDP D) equilibrium real GDP; taxes
D
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Indicate whether the statement is true or false
Assume that a very unusual production process involves increasing marginal productivity that appears to have no end. What would the total productivity function look like? Comment on the likelihood of such a function in the real world
What will be an ideal response?
Assume the current interest rate on a one-year bond is 7%, and the interest rate investors expect on the one-year bond one year from now is 3%
According to the expectations hypothesis, the current interest rate (per year) on a two-year bond should be A) 3%. B) 5%. C) 7%. D) 10%.
Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?