Assume there is a multiplier effect, some crowding out, and no accelerator effect. An increase in government expenditures changes aggregate demand more,
a. the smaller the MPC and the stronger the influence of income on money demand.
b. the smaller the MPC and the weaker the influence of income on money demand.
c. the larger the MPC and the stronger the influence of income on money demand.
d. the larger the MPC and the weaker the influence of income on money demand.
d
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Which of the following is NOT a reason the Fed changes the rate of growth of the money supply?
A) to influence the amount of consumption B) to influence the amount of investment C) to shift the demand for money curve D) to influence aggregate demand
Suppose that a new tax on hiring labor is imposed. The demand for labor will ________, and as a result real wages will ________ and employment will ________
A) increase; increase; decrease B) increase; decrease; increase C) increase; increase; increase D) decrease; decrease; decrease