When the price level falls, consumers may feel wealthier and the consumption function will shift upward
a. True
b. False
Indicate whether the statement is true or false
True
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One argument advanced in favor of not increasing the income tax on individuals with high income is that
A) increasing income tax increases wealth which contributes to increases in GDP. B) increasing the income tax on these individuals will reduce economic efficiency. C) not increasing income taxes will discourage corporations from increasing investment. D) increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes.
A bank has excess reserves of $4,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves will be
A) -$5,000. B) -$1,000. C) $1,000. D) $5,000.