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* 2 1 . Based on the Keynesian model, one reason to support government spending increases over tax cuts as measures to increase output is

*21. Based on the Keynesian model, one reason to support government spending increases over tax cuts as measures to increase output is that: a. government spending increases the MPC more than tax cuts.b. the government-spending multiplier is larger than the tax multiplier.'c. government-spending increases do not lead to unplanned changes in inventories, but tax cuts do.d. increases in government spending increase planned spending, but tax cuts reduce planned spending.*22. One policy response to the U.S. economic slowdown of 2001 was tax cuts. This policy response can be re presented in the ISLM model by shifting the'a. LM; right'b. LM; left'c. IS; right'd. IS; leftcurve to the*23. Assume that planned expenditure consists of consumption, investment, and government expenditures onl y and that investment and government expenditures are fixed. Further, assume that consumption C = c (Y t Y), where ty denotes taxes as a function of income. Calculate the equilibrium level of Y and the government e xpenditure multiplier.

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