According to supply-side economists, a cut in taxes will
a. cause people to spend more, causing the aggregate supply curve to shift to the right
b. act as a work incentive causing the aggregate supply curve to shift to the right
c. encourage people to work more to get more income to spend, causing the aggregate supply curve to shift to the left
d. encourage people to work more hours and be more productive, causing the society to move upward along the aggregate supply curve
e. increase private and reduce government spending so that aggregate demand remains fairly constant
B
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If tofu is a normal good, an increase in income will
a. decrease the price of tofu b. decrease the production of tofu c. shift the demand curve for tofu to the left d. shift the demand curve for tofu to the right e. decrease the quantity demanded of tofu
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and current international transactions become more negative (or less positive). b. Real GDP rises, and current international transactions become more negative (or less positive). c. Real GDP falls, and current international transactions rises. d. Real GDP rises, and current international transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
When the government provides poor families with antipoverty programs such as welfare, Medicaid, food stamps, and the Earned Income Tax Credit which are all tied to income,
a. the government creates an egalitarian distribution of income. b. the recipients can usually receive benefits for an unlimited amount of time. c. it is common for families to face very high effective marginal tax rates. d. the incentive to work and earn more income remains unchanged.
Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 10 percent,
A. the lender benefits from inflation, while the borrower loses from inflation. B. the borrower benefits from inflation, while the lender loses from inflation. C. neither the borrower nor the lender benefits from inflation. D. both the borrower and the lender lose from inflation.