Based on the Keynesian Model,one Reason to Support Spending Increases

question 97

Multiple Choice

Based on the Keynesian model,one reason to support spending increases over tax cuts as measures to increase output is that:

• A) government spending increases the MPC more than tax cuts.
• B) the government-spending multiplier is larger than the tax multiplier.
• C) government-spending increases do not lead to unplanned changes in inventories,but tax cuts do.
• D) increases in government spending increase planned spending,but tax cuts reduce planned spending.

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Definitions:

Phrenology

A now-discredited theory that claimed bumps on the skull could predict mental traits and character traits.

Localization of Function

The concept that different areas of the brain are responsible for specific functions or activities.

Synaptic Gaps

The small spaces between neurons, across which neurotransmitters travel to enable neural communication.

Franz Gall

A physician and neuroanatomist known for developing the theory of phrenology, which suggested that the bumps on the skull represent mental faculties and character traits.