Answered: if the mps increases the multiplier…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 5DQ

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hi, posting this again. will you let me know if these are correct?

7- if the mps increases the multiplier decreases -true

8- part of the cost of growing government budget deficits is and “opportunity cost” of what else could have been done with the money, particularly if the borrowing is used to increase consumption spending. -true

9- tax cuts in the classical range of the AS curve will stimulate output and employment. -true

10- if the AS curve were flat/horizontal an increase in AD would not be inflationary- true

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