Assume that we want to drive our economy out of recession by generating a $400 billion change in national income. The MPC is 0.8 . Which of the following policy prescriptions would generate the targeted $400 billion change in income?
a. $120 billion increase in government spending and $50 billion increase in tax revenue
b. $140 billion increase in government spending and $70 billion increase in tax revenue
c. $160 billion increase in government spending and $120 billion increase in tax revenue
d. $220 billion increase in government spending and $100 billion increase in tax revenue
e. $400 billion increase in government spending and $300 billion increase in tax revenue
A
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OPEC periodically meets to agree to restrict the cartel's oil output, and yet almost every member of OPEC produces more than its own output quota. This suggests that OPEC has
A) a threat of substitute goods. B) a noncooperative equilibrium. C) new potential entrants. D) a cooperative equilibrium.
In Table 5.3, the standard deviation is
A) highest for the HMO choice, and it is $76,000. B) lowest for the HMO choice. C) higher for owning one's own practice than for going into research. D) higher for the HMO choice than for going into research.