According to the new classical theory, a $50 billion increase in government expenditures financed by a $50 billion increase in the budget deficit will
a. cause real output to expand $200 billion if the marginal propensity to consume is three-fourths.
b. exert little impact on real output because higher real interest rates will crowd out private spending.
c. stimulate aggregate demand, causing prices to rise (inflation).
d. be largely offset by a reduction in private spending because individuals will anticipate higher future taxes.
D
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Consider the following economic agents:
a. the government b. consumers c. producers Who, in a market economy, decides what goods and services will be produced with the scarce resources available in that economy? A) producers B) consumers and producers C) the government, consumers, and producers D) consumers E) the government
A major disadvantage of a corporation is
a. its weakness at raising funds. b. its inability to limit the financial liability of the owners. c. the double taxation of its profits. d. its lack of continuity in the event of a stockholder’s death.
A state tax assessed specifically on cigarettes is an example of
A) an excise tax. B) a consumption tax. C) a social tax. D) a tariff.
Which of the following shifts both short-run and long-run aggregate supply left?
a. a decrease in the actual price level b. a decrease in the expected price level c. a decrease in the capital stock d. a decrease in the money supply