12.Equal changes in government spending and taxation lead to an equal change in income.

True

False

16.At equilibrium, when a tax is put in place, income falls more than the tax multiplied by the multiplier since consumers pay for the tax in part by reducing their savings.

False

True

22.Expectations of a future general price increase will lead to a higher level of equilibrium expenditures.

False

True

23.The rate of return on investment is the main determinant of investment spending.

True

False

25.Consumption expenditures play a minor role in the U.S. economy.

False

True

28.if income increases across Europe, what will happen to the aggregate demand curve for the United States?

The aggregate demand curve will shift to the left in the short run and then to the right in the long run.

The aggregate demand curve will not change.

The aggregate demand curve will shift to the right.

The aggregate demand curve will shift to the left.

46.Which factor is NOT a component of aggregate demand?

net exports

consumption

income

investment

56.Which statement does NOT refer to a potential problem associated with cyclically balancing the federal budget?

Politicians find it difficult to cut spending or raise taxes.

Forecasting the turning point of the economy is very difficult.

Most economists agree that the federal budget should be balanced annually to avoid adding to the deficit.

Different phases of the business cycle are not of equal length or severity.