Assume that the marginal propensity to consume is 0.8. Government purchases of goods and services increase by $100 billion, financed by a $100 billion tax increase. Real GDP will:
A) expand by $100 billion.
B) contract by $100 billion.
C) expand by $500 billion.
D) expand by $400 billion.
Correct Answer:
Verified
Q191: Expansionary fiscal policies:
A)make the budget surplus smaller.
B)make
Q192: The federal budget tends to move toward
Q193: Suppose the economy is in a recessionary
Q194: The effect of a government deficit is:
A)contractionary.
B)expansionary.
C)neutral.
D)biased.
Q195: Assume that the marginal propensity to consume
Q197: Suppose the economy is operating at an
Q198: Suppose the economy is operating at an
Q199: Assume that the marginal propensity to consume
Q200: A government surplus is contractionary because _
Q201: A cyclically adjusted budget balance:
A)shows what the
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