Equal increases in government spending and taxes a

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110) Equal increases in government spending and taxes (a) increase equilibrium output. (b) reduce equilibrium output. (c) have no effect on equilibrium output. (d) reduce interest rates. (e) do both (a) and (d) of the above. Answer: A Question Status: New 111) If government purchases increase by 100, and the purchases are financed by an increase in autonomous net taxes of 100, and the mpc = 0.5, then in the simple Keynesian model 112) Assume equilibrium at full employment for an economy characterized by the simple Keynesian model. If the government raises taxes to eliminate a budget deficit, then
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846 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 113) In a closed economy, aggregate demand is the sum of 114) In an open economy, aggregate demand is the sum of (a) consumer expenditure, actual investment spending, and government spending. (b) consumer expenditure, planned investment spending, and government spending. (c) consumer expenditure, actual investment spending, government spending, and net exports. (d) consumer expenditure, planned investment spending, government spending, and net exports. Answer: D Question Status: Previous Edition 115) If net exports increase by 100 and the mpc is 0.75, equilibrium output increases by 116) If net exports increase by 250 and the mpc is 0.75, equilibrium output increases by 117) If net exports decrease by 250 and the mpc is 0.75, Chapter 23 The Keynesian Framework and the ISLM Model 847
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