Which of the following is an example of
When consumption rises, investment goes up; when
investment rises, consumption increases.
The temperature rises as the furnace runs; as the
temperature rises, the furnace turns off.
When less gasoline is available, the
price rises; when price rises, people use less
When Joe studies more, he gets higher
test scores; as he gets higher test scores, he studies
Keynesian economics says that higher
taxes reduce total spending. Suppose a country enters a
recession and as a result tax receipts fall. Of the
following possibilities, which would Keynesian economics
Raise taxes to produce a surplus
Raise taxes to balance the budget
Leave taxes alone but cut spending
enough to balance the budget.
Do nothing; the reduction in taxes
caused by recession is an automatic stabilizer.