An increase in the marginal tax rate:

a)increases the multiplier

b)decreases the multiplier but cannot make it negative

c)has no effect on the multiplier

d)can either increase or decrease the multiplier

e)decreases the multiplier and can make it negative

17. Which of the following increases the size of the multiplier?

a)a decrease in the marginal propensity to consume

b)an increase in autonomous spending

c)an increase in the marginal income tax rate

d)a decrease in the marginal propensity to import

e)an increase in investment

18. If the slope of the AE curve is 0.5, then the expenditure multiplier equals:

a)5

b)4

c)3

d)2

e)0.5

19. At the beginning of a recession, the multiplier:

a)offsets the initial cut in autonomous expenditure and slows the recession

b)reinforces the initial cut in autonomous expenditure and adds force to the recession

c)offsets the initial cut in autonomous expenditure and reverses the recession

d)reinforces the initial cut in autonomous expenditure and reverses the recession

e)has no effect on the recession

20. A movement along the AE curve arises from a change in ____ and a movement along the AD curve arises from a change in ____.

a)real GDP; the price level

b)real GDP; investment

c)the price level; the price level

d)the price level; investment

e)investment; the price level

21. A change in the price level:

a)shifts the AE curve and creates a movement along the AD curve

b)creates a movement along the AE curve and shifts the AD curve

c)shifts the AE curve and the AD curve in the same direction

d)shifts the AE curve and the AD curve in opposite directions

e)creates a movement along both the AE curve and the AD curve

22. The AD curve is the relationship between:

a)aggregate planned expenditure and the price level

b)aggregate planned expenditure and the quantity of real GDP demanded

c)the quantity of real GDP demanded and the quantity of real GDP supplied

d)the quantity of real GDP demanded and the unemployment rate

e)aggregate planned expenditure and real GDP when the price level is fixed