When the government levies a $100 million tax on people's income and puts the $100 million back into the economy in the form of a spending program such as new interstate highway construction, the
a. tax multiplier magnifies the effect of taxes on the level of national income
b. tax, then, generates a $100 million decline in national income
c. level of national income expands by $100 million
d. effect on national income is uncertain
e. tax multiplier overpowers the income multiplier, triggering a rollback in national income
C
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Which of the following is a monetary policy tool used by the Federal Reserve Bank?
A. Decreasing the rate at which banks can borrow money from the Federal Reserve B. Increasing the reserve requirement from 10% to 12.5% C. Buying 500 million worth of government securities, such as treasury bills D. All of the above
Between 1950 and 2004, standards of living in the OECD countries
A) did not change at all. B) were converging. C) all increased at the same rate. D) decreased at the same rate. E) decreased, but at different rates.