According to Adam Smith, what is the primary source of a nation's wealth?
a. The amount of gold and silver in the government's possession.
b. A spirit of cooperation in which people share according to their means.
c. Strong central planning authorities.
d. The people's ability to produce products and trade in free markets.
D
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How does a government-sponsored good differ from a public good?
What will be an ideal response?
Each of the following is a challenge that society's would face in trying to use the second welfare theorem to achieve equity without sacrificing efficiency EXCEPT:
A. endowments aren't always easily observable. B. wealth isn't an endowment. C. lump-sum transfers distort choices. D. transfers based on wealth aren't lump-sum transfers.
Which is of the following is an example of a progressive tax?
a. An excise tax on a luxury good b. An income tax whose rate increases as income increases c. Medicare tax, which is a percentage of income d. A payroll tax that does not increase beyond a certain level of income
Equal increases in government spending and taxes will:
a. lead to an increase in the equilibrium level of real GDP output that is larger than the initial change in government spending and taxes. b. cancel each other out so that the equilibrium level of real GDP will remain unchanged. c. lead to an equal increase in the equilibrium level of real GDP. d. lead to an equal decrease in the equilibrium level of real GDP.