Assume the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by 100 billion. The aggregate demand curve will shift to the:
a. left by 80 billion.
b. right by 200 billion.
c. right by 400 billion.
d. left by 400 billion.
Question 2
According to the Monetarist view, the impact of expansionary monetary policy will be:
a. the same in the long run as in the short run.
b. the same regardless of whether the effects of the policy are anticipated or unanticipated.
c. a higher price level (inflation).
d. a decrease in short-run prices and an increase in long-run prices.
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