Which of the following assumptions is usually made about government purchases?
A) They vary directly with the interest rate.
B) They are autonomous.
C) They vary directly with the level of income.
D) They equal the level of net taxes in equilibrium.
E) They vary inversely with the level of income.
Correct Answer:
Verified
Q1: Assume that initially G is $100 and
Q2: Exhibit 11-5 Q3: Government purchases are assumed to be autonomous Q5: If the government increases its purchases by Q7: If the MPC = 0.6 and government Q8: When government purchases increase,the spending multiplier tells Q9: If the MPC equals 0.75 and G Q10: If government expenditures or taxes are assumed Q11: Exhibit 11-5 Q139: Equal increases in government purchases and in
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