Suppose two economists disagree about whether a particular tax cut is a good policy. The economist supporting the cut believes that it will increase economic growth. The other economist opposes it because he thinks it will have no effect on growth. The source of their disagreement in this case is most likely due to different:
A. levels of coldheartedness.
B. value judgments.
C. interpretation of Pareto optimality.
D. interpretations of empirical evidence.
Answer: D
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How does a decrease in government spending affect the aggregate expenditure line?
A) It shifts the aggregate expenditure line upward. B) It shifts the aggregate expenditure line downward. C) It increases the slope of the aggregate expenditure line. D) It decreases the slope of the aggregate expenditure line.
One of the possible reasons for high sales and steady profit margins of General Motors, Ford, and Chrysler during 1950s and 1960s were aggressive pricing and design innovations
Indicate whether the statement is true or false
The intersection of the demand for loanable funds and the supply of loanable funds determines the
A. Par value. B. Real interest rate. C. Prevailing interest rate. D. Price รท earnings ratio.
Which of the following is true of the correlated random effects approach (CRE)?
A. The CRE approach assumes that the unobserved effect is uncorrelated with the observed explanatory variables. B. The CRE approach cannot be used if the regression model includes a time-constant explanatory variable. C. The CRE approach considers that the unobserved effect is correlated with the average level of explanatory variables. D. The CRE estimate equals the random effects estimate.