According to supply-side fiscal policy, reducing tax rates on wages and profits will:
A. create demand-pull inflation.
B. lower the price level but may trigger a recession.
C. result in stagflation.
D. reduce both unemployment and inflation.
Answer: D
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If Jack is a utility maximizer, shouldn't a fall in the price of popcorn cause an increase in his marginal utility of popcorn?
What will be an ideal response?
The major determinant of an individual's income is
a. whether or not his family is wealthy. b. his personality-if the coworkers and the boss like him. c. how productive he is combined with demand for what he produces. d. if he earns a salary or if he is paid by the hour.
If Congress instituted an investment tax credit
a. it would make buying bonds more desirable, so the demand for loanable funds would shift. b. it would make buying capital goods more desirable, so the demand for loanable funds would shift. c. it would make buying bonds more desirable, so the supply of loanable funds would shift. d. it would make buying capital goods more desirable, so the supply of loanable funds would shift.
Suppose that the Fed purchases a $1,000 government bond from you. If you deposit the entire $1,000 in your bank, what is the total potential change in the money supply as a result of the Fed’s action if reserve requirements are 10 percent?
A. $10,000 B. $5,000 C. $3,000 D. $2,000