2.2 "Supply-Side" Economics
What will be an ideal response?
After World War II, as noted, the debt generally declined as a percentage of GDP until 1980. The national debt was just over $900 billion in 1981, but rose by nearly $2 trillion during the next eight years. In other words, over those eight years the country incurred twice as much debt as it had in its first 200 years! How did this happen? Ronald Reagan's 1980 presidential campaign leaned heavily on the principles of "supplyside" economics, which promised that offering more benefits and incentivesto the individuals and groups that held the most wealth and productive capital would stimulate rapid investment growth and job creation. According to this principle, tax cuts would pay for themselves through greater revenues from an expanded economy.
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In 1986, the base year, GDP was 4000. In 1989 the GDP deflator was 115. We may conclude that
A.there was some inflation between 1986 and 1989. B. there was some deflation between 1986 and 1989. C. real GDP declined between 1986 and 1989. D. GDP declined between 1986 and 1989.
In a third-party payer system:
A. total expenditures generally rise. B. quantity demanded generally falls. C. quantity supplied generally falls. D. total expenditures generally fall.
A change in price is reflected by a movement along the same demand curve while a change in demand refers to a shift of the entire demand curve.
a. true b. false
Microeconomics is the study of
A) how households and firms make choices. B) the economy as a whole. C) the global economy. D) topics such as unemployment, inflation, and economic growth.