When an economy is operating below its potential capacity, Keynesian economists argue that:
a. taxes should be raised if the government is currently running a budget deficit.
b. taxes should be lowered but only if the government is running a budget surplus.
c. the government should cut taxes and/or increase spending in order to stimulate aggregate demand.
d. all of these.
c
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If the MPS is one-third, a $100 increase in net exports will
A) reduce real Gross Domestic Product (GDP) by $300. B) reduce real Gross Domestic Product (GDP) by $100. C) increase real Gross Domestic Product (GDP) by $300. D) increase real Gross Domestic Product (GDP) by $33.
An investor who bases the decision to buy an asset solely on the expected return of an asset is considered to be:
A) risk loving B) risk averse C) risk neutral D) risk avoiding
Which of the following is not part of the investment component of GDP?
A. Residential construction B. Plant, equipment, and software C. Net imports D. Business structures
Exhibit 8-13 Price and cost per unit curves
In Exhibit 8-13, if the price is P3, total economic profit is maximized or economic loss minimized at the output:
A. Q1. B. Q2. C. Q3. D. Q4.