The government wishes to close a recessionary gap by increasing national income by $700 billion. The MPC = 0.8 . Two policies are offered. Policy A calls for $180 billion in increased government spending and $50 billion in increased taxes. Policy B calls for $200 billion in increased government spending and $100 billion in increased taxes. Which of the following will increase the national income
by the desired $700 billion?
a. Both policies increase national income by $700 billion but Policy B offers a lower budget deficit.
b. Both policies increase national income by $700 billion and create equal budget deficits.
c. Neither policy increases national income by $700 billion.
d. Only Policy A increases national income by $700 billion.
e. Only Policy B increases national income by $700 billion.
D
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Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a
A) medium of exchange. B) store of value. C) unit of account. D) all of the above.
One important consequence of the confirmation bias is that:
A. Some people cannot correct a personal trait that might be causing them to fail in many ventures B. Someone could persist in pursuing a failed policy despite overwhelming evidence of the failure C. Bad decisions can be made because people will act without pausing to see whether their intuition is correct or not D. Some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments