CH 16 Econ 2301 - Question 1 Which of the following is...

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Question 1 Which of the following is caused by supply-side fiscal policy, but not by demand-side fiscal policy? Correct Answer: a. the level of full-employment output. Question 2 According to the new classical critique of fiscal policy, an increase in government spending today will lead to _____________ in current savings. Correct Answer: b. an increase Question 3 Refer to the table below, which lists the U.S. federal income tax rates for the different income brackets. If the highest point on the Laffer curve corresponds to a tax rate of 30%, then which of the following statements must be false? Taxable income brackets Tax rate 1 10% 2 15% 3 25% 4 28% 5 33% 6 35% Correct Answer: d. Increasing tax rates across all income tax brackets will cause a greater negative impact on tax revenue per return for the fifth income bracket than the sixth bracket. Question 4 The multiplier effect of fiscal policy predicts that an increase in government spending by $100 billion will increase total income by $400 billion if the marginal propensity to consume is 0.75. If we account for PARTIAL crowding out, then the increase in income will be
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