Which of the Following Statements Is Incorrect

question 169

Multiple Choice

Which of the following statements is incorrect?

• A)Given the economy's MPS, a $15 billion reduction in government spending will reduce the equilibrium GDP by more than would a $15 billion increase in taxes.
• B)Other things unchanged, a tax reduction of $10 billion will increase the equilibrium GDP by $25 billion when the MPS is 0.4.
• C)If the MPC is 0.8 and GDP has declined by $40 billion, this was caused by a decline in aggregate expenditures of $8 billion.
• D)A government surplus is anti-inflationary; a government deficit is expansionary.

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Definitions:

Mix of Potential Immigrants

The diverse characteristics (such as skills, education, and country of origin) of immigrants considered for entry into a country.

Optimal Quantity

The quantity of a good or service that maximizes a company's profits or an individual's utility, depending on the context.

Standard of Living

This is a measure of the economic prosperity and quality of life in a country or region, often assessed by income levels, access to goods and services, and other socioeconomic factors.

Fiscal Burdens

The financial obligations, such as taxes and debt payments, that a government must bear.