Macroeconomic Final

The tax multiplier is always one-half of the regular income/spending multiplier

The three leakages in the macroeconomic model present in the text are savings, taxes and imports

Which one of the following statements in TRUE about the federal government surplus or deficit, expressed as a percentage of GDP, in the United States over the last few decades?

The presence of interantional trade will tend to increase multiplier effects

The United States federal debt is currently a larger percentage of the national economy than it was during World War II.

Suppose that the marginal propensity to consume is 0.9. What is the tax multiplier for a lump sum tax in this case?

Suppose the government increases taxes by a lump sum of $500 million. If the marginal propensity to consume is 0.8, how much would the equilibrium level of output decrease according to the macroeconomic model presented in the text?

What is the equation for the tax multiplier for a lump sum tax?

Disposable income is the income available after pople have paid for necessary items liek food and shelter

The fact that people tend to spend some of their money on imported goods tends to reduce the multiplier effect as compared to an economy without a foreign sector

This question refers to the following Keynesian cross diagram. Which of the following could casue the shift show in the aboe Keynesian diagram?

Total federal government outlays in the United States have generall declined as a percentage of GDP in recent decades.

Expansionary fiscal policy would be a potential means to counteract a high inflation rate.

Suppse the government increases spending by $200 million but at the same time increases taxes by $200 million. According to the macroeconomic model presented in the text, by how much would equilibrium output change?

Suppose government spending increases by $1 million. The multiplier effect implies that income (Y) will increase by less than $1million