Chapter 10: Macroeconomic objectives (page 196)
How can governments utilize fiscal policy?
It can be utilized as a demand management tool
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Precisely how do the MPC and the APC differ? How does the MPC differ from the MPS? Why must the sum of the MPC and the MPS equal 1?
In what direction will each of the following occurrences shift the consumption and saving schedules, other things equal?
Which factors are affected when the government implements an expansionary fiscal policy?
What will the multiplier be when the MPS is 0, 0.4, 0.6, and 1? What will it be when the MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is 0.80? If the MPC instead is 0.67?
In what direction will each of the following occurrences shift the investment demand curve, other things equal?
An increase in unused production capacity occurs.
Business taxes decline.
The cost of acquiring equipment falls.
Widespread pessimism arises about future business conditions and sales revenues.
A major new technological breakthrough creates prospects for a wide range of profitable new products.
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