Other Things Constant, Which of the Following Would You Expect

question 32

Multiple Choice

Other things constant, which of the following would you expect to increase the output growth rate of a country?

• A) an increase in the rate of taxation on personal income
• B) an increase in the rate of investment as a share of total output
• C) passage of regulations restricting international trade
• D) passage of regulations restricting domestic trade

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Definitions:

Income

Income earned, particularly in a consistent manner, from labor or investment returns.

U.S. Exports

Goods and services produced in the United States and sold to other countries.

Aggregate Expenditure Line

A relationship tracing, for a given price level, spending at each level of income, or real GDP; the total of C + I + G + (X - M) at each level of income, or real GDP.

Marginal Propensity

The ratio of the change in consumption to the change in income, indicating how much consumption will change with a change in income.