SECTION A TRUE FALSEMULTIPLE-CHOICE QUESTIONS) 1) Assume that there is no foreign trade in the economy, the leakages and
Posted: Thu May 19, 2022 8:26 am
- Section A True Falsemultiple Choice Questions 1 Assume That There Is No Foreign Trade In The Economy The Leakages And 1 (31.61 KiB) Viewed 71 times
SECTION A TRUE FALSEMULTIPLE-CHOICE QUESTIONS) 1) Assume that there is no foreign trade in the economy, the leakages and injection approach to determine national income equilibrium can be written as S+I-T+G. 2) Fiscal policy is enacted through changes in taxation and investment spending. 3) The set of fiscal policies that would be most contractionary would be an increase in government spending and taxes. 4) Due to automatic stabilizers, when income rises, government transfer spending and tax revenues increase. 5) The equilibrium level of income is 11,000 billion, the full employment level of income is 11,250 billion and the marginal propensity to consume is 0.60. The full-employment level of income can be achieved if government spending is increased by 250 billion. 6) A budget surplus occurs when government revenue exceeds expenditure. 7) Higher interest rates make less people willing to spend their income, causing a downward shift of the aggregate expenditure (AE) function,