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Introduction to Economics 2
Introduction to Economics 2 Deneme Sınavı
Introduction to Economics 2 Deneme Sınavı Sorusu #349657
Introduction to Economics 2 Deneme Sınavı Sorusu #349657
Which of the following creates the multiplier effect?
Decrease in income
|
Decrease in public expenditures
|
Increase in savings
|
Increase in consumption expenditures |
Decrease in taxes |
Yanıt Açıklaması:
The effect of tax changes on consumption expenditures is determined by subtracting marginal propensity to import (MPI) from marginal propensity to consume (MPC). Namely, the part of additional income actually consumed domestically is determined according to difference between marginal propensity to consume and marginal propensity to import. Increase in consumption expenditures determined according to this difference creates the multiplier effect.
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