Essay
Suppose that the government increases expenditures by $150 billion while increasing taxes by $150 billion. Suppose that the MPC is .80 and that there are no crowding out or accelerator effects. What is the combined effect of these changes? Why is the combined change not equal to zero?
Correct Answer:
Verified
The multiplier is 1/1-MPC) = 1/1-.8) = 1...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q5: When there is an excess demand for
Q14: Keynes used the term "animal spirits" to
Q15: Most recessions and depressions<br>A)are accurately forecasted.<br>B)usually occur
Q65: Figure 34-4. On the figure, MS represents
Q83: An increase in the money supply shifts
Q121: Figure 34-3. <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB2297/.jpg" alt="Figure 34-3.
Q137: If the Federal Reserve decreases the money
Q157: Other things the same,a decrease in the
Q169: To stabilize interest rates,the Federal Reserve will
Q176: The interest rate falls if<br>A)either money demand