According to the Macroeconometric Model Developed by Data Resources Incorporated

question 142

Multiple Choice

According to the macroeconometric model developed by Data Resources Incorporated, if taxes are increased by $100 billion, but the money supply is held constant, then GDP will fall by about:

• A) zero.
• B) $25 billion.
• C) $75 billion.
• D) $100 billion.

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Definitions:

Five-Year Period

A span or timeframe that extends for five consecutive years.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows or the rate used by financial institutions for interbank lending and borrowing.

Present Value

The value today of a sum of money or future cash flows, taking into account a specific rate of return.

Future Cash Flow

The projected movement of money into and out of a business or investment over future periods.