Open with 7. A progressive tax rate acts as _when the gross domestic product (GDP) is high and _when GDP is low. (A) expansionary monetary policy; contractionary fiscal policy (B) contractionary fiscal policy; expansionary fiscal policy C) contractionary fiscal policy; expansionary monetary policy (D) contractionary fiscal policy; contractionary fiscal policy (E) expansionary fiscal policy: contractionary monetary policy Table 12.1 Increase in Additional National Income Consumption Spending $100 $75 $200 $150 $300 $225 $400 $300 8. The marginal propensity to consume in the nation described by Table 12.1 is equal to (A) 1 (B) 0.75 (C) 3 (D) 0.67 (E) 0.25 9. Refer to the data in Table 12.1. Which of the following policies would, all else equal increase gross domestic product (GDP) in this nation by $2.400 (A) Increase government spending by $600 (B) Increase government spending by $400 (C) Decrease taxes by $1,200 (D) Increase government spending by $600 and increase taxes by $6000 (E) Decrease taxes by $600 10. Refer to Table 12.1. Suppose that the economy is currently experiencing an inflationary gap of $1.800. How could the economy return to full employment? (A) Increase government spending by $450 with no change in taxes (B) Decrease government spending by $1, 800.ind increase taxes by $1,800 (C) Increase taxes by $450 with no change in government spending (D) Decrease government spending by $450 and decrease taxes by $450 (E) Increase taxes by $600 with no change in government spending 11. It takes several months for government economists to gather enough data to declare that a cession is underway. By this time, discretionary fiscal policy may be ineffective. This problem is referred to as (A) a developmental lag (B) an implementation lag C) crowding out (D) a recognition lag (E) a legislative lag