Ask Question, Ask an Expert


Ask Business Economics Expert

The basics of Macro Economics- Spending Multiplier, Aggregate demand, and Laffer curve.

1) When households' marginal propensity to consume (MPC) increases, the size of the spending multiplier:

1. decreases.

2. remains unchanged.

3. also increases.

4. reacts unpredictably.

2) According to the Laffer Curve, when the tax rate is 100 percent, tax revenue will be:

1. at the maximum value.

2. greater than it would be at a 50 percent tax rate.

3. the same as it would be at a 20 percent tax rate.

4. 0.

5. the same as it would be at a 50 percent tax rate.

3) Which of the following statements is true?

1. The presence of the automatic stabilizers tends to destabilize the economy.

2. To combat inflation, Keynesians recommend lower taxes and greater government spending.

3. A reduction in tax rates along the downward-sloping portion of the Laffer curve would increase tax revenues.

4. According to supply-side fiscal policy, lower tax rates would shift the aggregate demand curve to the right, expanding the economy and creating some inflation.

4) The Laffer curve shows as tax rates rise, tax revenue:

1. first rises, then falls, and then rises again.

2. first rises, and then falls.

3. rises.

4. remains at a constant level.

5. falls.

5) Assume Congress enacts a $10 billion increase in spending and a $10 billion tax increase to finance the additional government spending. The result of this balanced-budget approach is a:

1. $20 billion increase in aggregate demand.

2. $10 billion decrease in aggregate demand.

3. $10 billion increase in aggregate demand.

4. $100 billion increase in aggregate demand.

6) Which of the following is not an automatic stabilizer?

1. Corporate income tax revenue.

2. Personal income tax revenue.

3. Unemployment compensation benefits.

4. Property tax revenue.

7) The ratio of the change in GDP to an initial change in aggregate spending is the:

1. marginal propensity to consume.

2. marginal expenditure rate.

3. permanent income rate.

4. spending multiplier.

8) A $10 million increase in government spending has the same economic impact as a $10 million tax cut.

1. False

2. True

9) As the marginal propensity to consume (MPC) increases, the spending multiplier:

1. decreases.

2. becomes undefinable.

3. increases.

4. remains constant.

10) Illustrate which of the following countries devote the smallest percentage of its GDP to taxes?

1. Germany.

2. The United States.

3. The United Kingdom.

4. Sweden.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M920791

Have any Question? 

Related Questions in Business Economics

Question 1 for the following situations calculate

Question 1 . For the following situations, calculate elasticity of demand and comment on the answer.                             When the price of commodity X was Rs. 12/-, 40 units it were demanded. When the price decre ...

In the united states as in most countries we value the

In the United States, as in most countries, we value the benefits of a free and competitive market. This suggests an interesting question: what if there were to be no Antitrust laws or other regulations on business activ ...

Assessment task in this assessment students are required to

ASSESSMENT TASK: In this assessment, students are required to demonstrate their ability to apply economic principles learnt in this subject to analysing real-world business operations and evaluate how their long-run busi ...

Assignmentpart idirections please write a paper that is at

Assignment PART I Directions: Please write a paper that is at least two to three pages in length in which you address the questions below. Write your paper in APA format with at least one cited scholarly reference. Revie ...

Assessment task descriptiontopicstudents will be required

ASSESSMENT TASK: DESCRIPTION Topic Students will be required to choose a specific enterprise (it should ideally be one with which they are somewhat familiar) and develop a sustainability indicators monitoring system for ...

Assignment -consider the following cobb douglas production

Assignment - Consider the following Cobb Douglas production function where Y is maize output, X 1 is labour input, and X 2 is the capital. Data for estimating this equation is given in the Table below. Y = β 0 X 1i β_1 X ...

Allocation and allotments please respond to the following1

"Allocation and Allotments" Please respond to the following: 1. From the first e-Activity, examine and evaluate the disparity of Georgia budget allocation for education and property tax to the various localities. Based o ...

Chapter 1 managing changeq1 figure 176 shows how bad an

Chapter 1 Managing change Q1 Figure 1.76 shows how bad an implementation can become. Action needs to be taken to prevent this kind of situation. What would you recommend should be done? Q2 You are the project manager for ...

1what is the production possibilities curve and how is it

1. What is the production possibilities curve and how is it useful? 2. What 4 factors contribute to determining any point in this model? 3. How would we apply this framework to the real world? 4. You are planning to expa ...

Cite the sources used to answer this question provide the

Cite the source(s) used to answer this question. Provide the source(s) below your response and apply APA guidelines for references. 1) Class, is it possible for a business to show an accounting profit, but actually earn ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen