Briefly describe how imports and taxes affect the size of the expenditure multiplier
What will be an ideal response?
Both imports and taxes make the expenditure multiplier smaller. When the marginal propensity to import is larger, more of the induced consumption expenditure goes towards foreign goods, which have no effect on domestic production or income. When the tax rate is higher, more of the induced change in income goes towards taxes, leaving less available for spending.
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In the 1850s, the growth rate of real wages in U.S. manufacturing slowed to nearly zero because
a. the demand for manufacturing labor and the supply of manufacturing labor increased by approximately the same amount during this period. b. the demand for manufacturing labor and the supply of manufacturing labor decreased by approximately the same amount during this period. c. the demand for manufacturing labor increased more rapidly than the supply of manufacturing labor during this period. d. the demand for manufacturing labor increased while the supply of manufacturing labor decreased during this period.
In economics, items that are used to produce goods and services are known as
A) wants. B) needs. C) outputs. D) resources.