Suppose the government institutes a new investment tax credit. This is likely to
A) shift the short-run aggregate supply curve to the right by an amount equal to the amount of tax credit times the spending multiplier.
B) shift the aggregate demand curve to the right by an amount equal to the amount of tax credit times the spending multiplier.
C) shift the short-run aggregate supply curve to the right by an amount equal to the initial change in investment times the spending multiplier.
D) shift the aggregate demand curve to the right by an amount equal to the initial change in investment times the spending multiplier.
Answer: D) shift the aggregate demand curve to the right by an amount equal to the initial change in investment times the spending multiplier.
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When the government runs a deficit, which of the following is true?
A) G > T + TR B) T < G + TR C) T > TR - G D) G > TR - T
As a percentage of total federal revenues, the individual income tax has _____
a. increased substantially since 1960 b. declined substantially since 1960 c. increased slightly since 1960 d. declined slightly since 1960