If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand,we can conclude that
A) Government spending decreased by $125 million.
B) Taxes increased by $500 million.
C) Taxes decreased by $100 million.
D) Government spending decreased by $100 million.
Correct Answer:
Verified
Q21: To eliminate an AD shortfall of $100
Q22: In a diagram of aggregate demand and
Q23: The balanced budget multiplier says that
A)An increase
Q24: Which of the following is the best
Q25: Which of the following is true when
Q27: Assume the MPC is 0.75.To eliminate an
Q28: The total change in aggregate spending generated
Q29: Which of the following formulas is used
Q30: A tax cut
A)Directly decreases the disposable income
Q31: If the MPC equals 0.80,a $200 billion
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