Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should:
A. increase government expenditures by $80 billion.
B. reduce government expenditures by $40 billion.
C. reduce taxes by $40 billion.
D. reduce taxes by $80 billion.
D. reduce taxes by $80 billion.
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Producer surplus is the difference between ______.
a. what a producer is paid for a good and the cost of producing one unit of that good b. what a consumer is willing and able to pay for one unit of a good and the price actually paid c. the profit a producer makes and the profit remaining after taxes are paid d. the number of goods produced and the number of goods sold
Robert Lucas reflects the view of many economists when he argues that the most effective way to reduce world poverty is to:
A. take money from those who are very wealthy and give to those who are very poor. B. provide loans to developing countries. C. increase long-run growth. D. eliminate recessions.