A cut in marginal tax rates would:
a. increase the price level and real GDP in the short run if it has no effect on short-run aggregate supply
b. increase the price level and real GDP in the short run, even if possible aggregate supply effects are included.
c. increase real GDP in the short run, but there is an indeterminate effect on the price level if there is no supply-side effect on aggregate supply.
d. increase real GDP in the short run, but there is an indeterminate effect on the price level if supply-side effects on aggregate supply are included.
d
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Suppose you earn $4,800 a month and spend exactly $160 in each of the 30 days. If your entire earnings are deposited in your checking account at the beginning of the month, then your average quantity of money demanded is
A) $160. B) $1,200. C) $2,400. D) $4,800.
The multiplier effect refers to the fact that a change in spending (aggregate demand) will
a. increase the money supply. b. cause prices to rise by some multiple of the initial increase in spending. c. cause nominal output to rise by some multiple of the initial increase in spending. d. reduce prices by some multiple of the increase in spending.