Consider a Model with Demand- Determined Output and a Constant

question 3

Multiple Choice

Consider a model with demand- determined output and a constant price level. A decrease in the net tax rate causes _ in autonomous spending and a _ in the simple multiplier.

• A)a rise; fall
• B)a rise; rise
• C)no change; fall
• D)no change; rise
• E)a fall; fall

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Definitions:

Credit

Receiving money, goods, or services on the basis of an agreement between the lender and the borrower that the loan is for a specified period of time with a specified rate of interest.

Sale

The exchange of goods or services for money or other consideration.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a named party.

Budgets

Financial plans that outline an organization's revenue, expenditures, and investment strategies for a specific period.