Assume the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:
A. left by $80 billion.
B. right by $200 billion.
C. right by $400 billion.
D. left by $400 billion.
Answer: D
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A. raise taxes. B. lower taxes. C. raise government spending. D. put people to work in government jobs.
An increase in the discount rate will
A) have an unclear effect on the money supply. B) not affect the money supply. C) decrease the money supply. D) increase the money supply.
In the United States, of the following decades inflation was highest during the ________.,
A) 1970s B) 1990s C) 1960s D) 2000s
If nominal wage rates increase by 2 percent per year and the price level increases by 5 percent per year, real wages will:
a. increase by 3 percent per year. b. increase by 5 percent per year. c. increase by 2 percent per year. d. decrease by 5 percent per year. e. decrease by 3 percent per year.