Mathematically, the value of the tax multiplier in terms of the marginal propensity to consume (MPC) is given by the formula:

Which is NOT an example of moral hazard

a. people eat more at all-you-can-eat buffets b. loggers select the most profitable trees to harvest even when they are not paying per tree felled c. Drivers of heavier, safer cares are more likely to run stop signs d. workers on commission work harder than those paid an hourly wage

Suppose a recession occurs as a result of a negative supply shock, and instead of the economy naturally working its way back to equilibrium, the government uses policy to shift the aggregate demand curve to fight the recession. Using policy this way would

A) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level. B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. C) quickly result in a new, higher level of real GDP and a permanently lower price level. D) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP.