Macroeconomics Module 34 Video Quiz Gonzaga
Taxes increase as real GDP rises. This is an example of an automatic stabilizer
true
If policy makers want to increase real GDP by $100 billion and the marginal propensity to consume is 0.75, they should __ taxes by __
decrease, more than $25 billion
The MPC is equal to 0.9 and the government increases spending by $200 billion. This increase in spending is financed by a $200 billion increase in taxes. As a result real GDP will
increase by $200 billion
The multiplier effect of changes in government purchases of goods and services is equal to:
1 / (1 - MPC)
Discretionary fiscal policy entails:
Using government spending or tax policy to affect aggregate demand
If the marginal propensity to consume is 0.9, then the tax multiplier will be:
less than 10
A change in taxes shifts the aggregate demand curve by __ than a change in government spending for goods and services and has a __ effect on real GDP
less; smaller