In Vickery auctions, the item is awarded to the highest bidder at a price set by

Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change

a. Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending—the multiplier effect. b. The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates. c. The higher interest rates make borrowing more costly and reduce investment spending—the crowding-out effect. d. All of the above

If the demand for donuts is elastic, then a decrease in the price of donuts will

a. increase total revenue of donut sellers. b. decrease total revenue of donut sellers. c. not change total revenue of donut sellers. d. There is not enough information to answer this question.