QUESTION 25If the marginal propensity to consume is 0.75, the multiplier for taxes and transfer payments is: a.equal to 4. b.equal to 0.75. c.greater than 4. d.less than 4. QUESTION 26If workers expect a lower rate of inflation, the short-run Phillips curve will: a.shift up. b.remain constant, but there will be a movement down the curve. c.shift down. d.be unaffected.

If the marginal propensity to consume is 0.75, the multiplier for taxes and transfer payments is:…

Answered: If the marginal propensity to consume…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 25

If the marginal propensity to consume is 0.75, the multiplier for taxes and transfer payments is:

a.
equal to 4.

b.
equal to 0.75.

c.
greater than 4.

d.
less than 4.

QUESTION 26

If workers expect a lower rate of inflation, the short-run Phillips curve will:

a.
shift up.

b.
remain constant, but there will be a movement down the curve.

c.
shift down.

d.
be unaffected.

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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