Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in taxes on the returns to capital impacts economic growth
Lower taxes on the returns to capital will give firms an incentive to employ more capital. With more capital employed, the production function would shift upward leading to a higher level of Real GDP. More Real GDP corresponds to a shifting of the LRAS curve rightward (economic growth).
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Following the tariff imposed on Chinese tires, some businesspeople correctly argued that the U.S. tariff would result in
A) China retaliating by raising tariffs on some U.S. exports. B) China halting the sale of all products in the United States. C) U.S. firms never being able to meet the demand for U.S.-produced tires. D) the government demanding price cuts from U.S. tire manufacturers.
"As interest rates rise, people save more money." A graph displaying this relationship would show
A) an inverse relationship. B) a positive relationship. C) a cross-section graph. D) a positive then a negative relationship.
An increase in real GDP
A) increases the buying and selling of goods and decreases the demand for money as a medium of exchange. B) decreases the buying and selling of goods and decreases the demand for money as a medium of exchange. C) decreases the buying and selling of goods and increases the demand for money as a medium of exchange. D) increases the buying and selling of goods and increases the demand for money as a medium of exchange.
The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent
The "Buy American" provision would ________ consumer surplus and ________ producer surplus for industries that produced protected products in the United States. A) decrease; increase B) decrease; decrease C) increase; increase D) increase; decrease