Econ quiz 7
An economy has an output gap of $100,000. If the MPC in an economy is 0.8, whatchange in spending is necessary to close this gap?
$20,000
Based on your answer to the previous question, the MPS is
0.25
A household's income rises from $30,000 to $46,000. Its consumption rises from$27,000 to $39,000. Find the MPC.
0.75
Expansionary fiscal policy will cause the
AD shift right
Automatic stabilizers have which advantage over discretionary fiscal policy?
Automatic stabilizers work faster
Which of the following is an example of an automatic stabilizer?
During a recession, more people file for unemployment benefits.
Discretionary fiscal or monetary policy is more consistent with
Keynesian theory
Current real GDP is $100. Potential real GDP is $50. If the government wishes to use fiscal policy, it should run a
budget surplus
If government spending pushes up equilibrium interest rates in the market, this isreferred to as
crowding out effect
Which of the following would be most effective to stabilize the economy during arecession?
decreasing taxes
If people become anxious about the future economy, we expect the MPS to
increase