Assume that the marginal propensity to consume is 0.8 and potential output is $800 billion. If GDP is $850 billion:
A) there is an inflationary gap.
B) there is a recessionary gap.
C) the economy is in long-run equilibrium.
D) taxes should be decreased.
Correct Answer:
Verified
Q176: Discretionary fiscal policy refers to changes in:
A)interest
Q177: Government transfer payments rise when the economy
Q178: Automatic stabilizers are government spending and taxation
Q179: The automatic stabilizer in government tax revenue
Q180: The fact that tax receipts fall during
Q182: The government has a budget deficit if:
A)its
Q183: Use the following to answer questions :
Scenario:
Q184: A government budget surplus would be contractionary
Q185: Use the following to answer questions :
Scenario:
Q186: Use the following to answer questions :
Scenario:
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