Why might the response of far-sighted consumers reduce the multiplier effect of an increase in government expenditures?
Consumers may recognize that borrowing now to finance expenditures means higher future taxes so they reduce current expenditures in anticipation of higher future taxes.
Economics
You might also like to view...
Refer to Figure 7-3. What is the reduction in value of consumer surplus after the imposition of the quota?
A) $8 million B) $26.25 million C) $27.75 million D) $30 million
Economics
Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below.Mega Corp: TC = 5,000 + 100QBig Inc: TC = 4,000 + 200QIf each firm produces 10 units, Mega Corp's total cost will be ________, and Big Inc's total cost will be ________.
A. $15,000; $14,200 B. $5,000; $4,000 C. $5,100; $4,200 D. $6,000; $6,000
Economics