Which of the following statements is true?
a. Above the optimal tax rate, a reduction in tax rates along the downward-sloping portion of the Laffer curve would increase tax revenues.
b. According to supply-side fiscal policy, lower tax rates would shift the aggregate demand curve to the right, expanding the economy and creating some inflation.
c. The presence of the automatic stabilizers tends to destabilize the economy.
d. To combat inflation, Keynesians recommend lower taxes and greater government spending.
a
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Proponents of a balanced budget amendment to the Constitution argue that it will finally exert discipline on the federal government and so prevent large peacetime deficits. What do the critics argue?
What will be an ideal response?
Spending on programs that Congress authorizes ________ is known as discretionary spending
A) after approval from the Federal Reserve B) on an off-budget emergency basis C) by prior law D) on an annual basis
Sears and Wal-Mart must decide whether to lower their prices, based on the economic profits shown in the table above. Which of the following is TRUE?
A) This situation is not a prisoners' dilemma. B) If Sears lowers its prices and Wal-Mart does not, Sears will make a $20 million economic profit. C) If Wal-Mart lowers its prices, Sears should keep its prices high. D) Both Sears and Wal-Mart would jointly be better off if they could each keep their prices high.
When a producer is operating efficiently it is producing:
A. the good in which it has an absolute advantage. B. at a point on or under its production possibilities frontier. C. at a point on its production possibilities frontier. D. only one good.