Assume that we want to drive our economy out of recession by generating a $400 billion change in real GDP. The MPC is 0.80 . Which of the following policy prescriptions would generate the targeted $400 billion change in income?
a. $120 billion increase in government spending and $50 billion increase in tax revenue.
b. $140 billion increase in government spending and $70 billion increase in tax revenue.
c. $160 billion increase in government spending and $120 billion increase in tax revenue.
d. $220 billion increase in government spending and $100 billion increase in tax revenue.
e. $400 billion increase in government spending and $300 billion increase in tax revenue.
a
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Indicate whether the statement is true or false
The firm in a perfectly competitive industry is a
A) price taker. B) price maker. C) price seeker. D) price dealer.
What is the relationship between total taxes and net taxes?
a. total taxes = net taxes ? transfer payments b. net taxes = total taxes + local taxes c. net taxes = transfer payments / total taxes d. total taxes = net taxes - transfer payments e. total taxes = net taxes + transfer payments
Suppose the U.S. inflation rate falls while the inflation rate among the members of the European Monetary Union (EMU) holds constant. Other things equal, what will happen in the balance of payments accounts?
What will be an ideal response?