When the government levies a $100 million tax on people's income and puts the $100 million back into the economy in the form of a spending program, such as new interstate highway construction, the:
a. tax, then, generates a $100 million decline in real GDP.
b. level of real GDP expands by $100 million.
c. effect on real GDP is uncertain.
d. tax multiplier overpowers the income multiplier, triggering a rollback in real GDP.
b
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An increase in government spending would cause which of the following to happen?
A) The aggregate demand curve would shift to the right. B) The aggregate demand curve would shift to the left. C) The aggregate supply curve would shift to the right. D) The aggregate supply curve would shift to the left.
Justin is trying to decide whether he wants to spend a $50 birthday check on a new DVD player or tickets to a concert. If he chooses the DVD player, what is the opportunity cost of this decision?
A. Birthday check B. DVD player C. Concert tickets D. $50