Assume the economy is initially in goods market equilibrium with all variables at their expected levels. Considering only the short run implications for the economy, which of the following statements are true: a) Following a cut in the proportional tax rate, national income rises and the budget balance improves. b) If the multiplier estimated by researchers from the data is less than one, then following a rise in government spending, output is lower in the new equilibrium. c) Following a rise in households' target wealth, both consumption and output are lower in the new equilibrium. +

Assume the economy is initially in goods market equilibrium with all variables at their expected levels. Considering only the short run implications for the economy, which of the following statements are true: a) Following a cut in the proportional tax rate, national income rises and the budget balance improves. b) If the multiplier estimated by researchers from the data is less than one, then following a rise in government spending, output is lower in the new equilibrium. c) Following a rise in households' target wealth, both consumption and output are lower in the new equilibrium. +

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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