"If the marginal tax rate is high enough, the expenditure multiplier can be negative." Is the previous statement correct or incorrect?
What will be an ideal response?
The statement is incorrect. The higher the marginal tax rate, the smaller the expenditure multiplier, but the expenditure multiplier always remains positive.
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In the Keynesian model, to understand the determination of income and employment it is necessary to understand
A) how aggregate supply is determined. B) how aggregate demand is determined. C) how long-run aggregate supply is determined. D) how interest rates are determined.
_____ is the argument that with globalization, countries compete for international investment by offering low or no environmental regulations or labor standards
a. "Free rider problem" b. "Tragedy of the commons" c. "Race to the bottom" d. "Flag of convenience" e. "Enlightened self-interest"