Why might government expenditures be more appropriate than tax cuts to counter recessions? Is there any evidence for this thinking?
According to the traditional Keynesian model government expenditures have a larger impact on aggregate demand than tax cuts. Since tax cuts will be partly saved, the impact of a tax cut on aggregate demand is less than the impact of an increase in government expenditures. There is some evidence from computer simulations that government expenditures have a larger multiplier effect than tax cuts.
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To show the values of an economic variable for different groups in a population at a point in time, it is best to use a
A) trend-section diagram. B) cross-section graph. C) linear graph. D) time-series graph. E) scatter diagram.
Which of the following $1,000 face-value securities has the highest yield to maturity?
A) a 5 percent coupon bond with a price of $600 B) a 5 percent coupon bond with a price of $800 C) a 5 percent coupon bond with a price of $1,000 D) a 5 percent coupon bond with a price of $1,200