Multiple Choice
Suppose the price level is fixed, the MPC is 0.8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly) , government should
A) increase government expenditures by $200 billion.
B) reduce taxes by $200 billion.
C) increase government expenditures by $40 billion.
D) reduce taxes by $160 billion.
Correct Answer:
Verified
Correct Answer:
Verified
Q128: The operational lag of fiscal policy refers
Q129: In an economy, the government wants to
Q131: The effect of contractionary fiscal policy is
Q132: Expansionary fiscal policy is so named because
Q134: The total amount of debt owed by
Q135: The United States has experienced both budget
Q135: The United States has experienced both budget
Q136: The amount by which government expenditures exceed
Q137: Contractionary fiscal policy would tend to make
Q138: Can the large public debt cause the