Suppose that the government is considering a policy to combat unemployment. If the government pays for increased spending by borrowing funds that otherwise would have been used for consumption and investment,
a. the positive effect of increased government spending is augmented by an increase in private spending.
b. the negative effect of increased government spending is offset by an increase in private spending.
c. the negative effect of increased government spending is augmented by a reduction in private spending.
d. the positive effect of increased government spending is offset by a reduction in private spending.
d. the positive effect of increased government spending is offset by a reduction in private spending.
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A business that is jointly owned by two or more people is called a:
a. partnership b. nonprofit c. nonprofit d. sole proprietorship
The tax multiplier is greater than the spending multiplier regardless of the value of the marginal propensity to consume (MPC)
a. True b. False Indicate whether the statement is true or false