Question

QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC=0.75) O A GDP stays the same OB GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion D.GDP will decrease QUESTION 13 An example of an automatic stabilizer is: 1. the President and Congress agree to new legislation that will cut taxes during a recession B. the drop in income taxes that occurs during recessions from the general drop in incomes the President and Congress agree to new legislation that will increase government spending during a recession OD. All of the above

Answer 1

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