Answer the questions above (MacroEconomics) QUE STION 1 According to Ricardo and

Question

Answer the questions above (MacroEconomics)

QUE STION 1 According to Ricardo and the new classical economists, if a tax cut is viewed as temporary, t then there may not be a significant increase in personal consumption. there will be a greater impact on national income than if the tax cut is permanent O there can be no impact on the price level there will be an inward shift in aggregate supply QUESTION 2 All of the following are automatic fiscal stabilizers EXCEPT a Congressionally mandated decrease in tax rates to stimulate the economy O a decrease in unemployment compensation during an expansion o a decrease in overall tax revenues during a recession o an increase in unemployment expenditures during a recession. QUESTION 3 Autonomous consumption is O consumption spending that is earned rather than transferred from the government consumption spending that does not depend on the level of income the amount spent on consumption when saving equals zero O consumption spending when the marginal propensity to consume is 1

Explanation / Answer

Answer 1. there will be a greater impact on national income than if the tax cut is permanent

Answer 2. a decrease in unemployment compensation during an expansion

Answer 3. consumption spending that does depend on the level of income

Answer 4. the discretionary changing of government expenditures to achieve a higher employment level

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