Question

80. Using your knowledge of the economy, answer the following

80a. Which statement correctly describes the effects of fiscal instruments/measures?

a. Government spending increases aggregate expenditures; taxes increase disposable income, and hence consumption.

b. Government spending increases aggregate expenditures; taxes reduce disposable income, and hence consumption.

c. Government spending decreases aggregate expenditures; taxes increase disposable income, and hence consumption.

80b. An economy grows if:

a. labor expands at a more rapid pace than capital.

b. capital expands at a more rapid pace than labor.

c. capital and labor expand at a constant rate.

d. none of the above.

e. all of the above

d. Government spending decreases aggregate expenditures; taxes reduce disposable income, and hence consumption.

e. Government spending increases aggregate expenditures; taxes have no effect on disposable income or consumption.

80c. Long-run economic growth results from

a. a larger and better-educated labor force

b. improvements in technology

c. a higher capital-to-labor ratio

d. all of the above

e. none of the above

Answer 1

a) "B"

Government spending increases aggregate expenditures; taxes reduce disposable income, and hence consumption.

b) "E"

all of the above, if the capital increase or the labor increase the economy will increase.

c) "D"

All of the above in the market will lead to a long run economic growth.