Changes in tax rates impact the economy through:
A. Both aggregate demand and aggregate supply.
B. Aggregate supply.
C. Aggregate demand.
A. Both aggregate demand and aggregate supply.
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How does the long-run supply curve differ from the short-run supply curve for a perfectly competitive firm? Explain your answer
What will be an ideal response?
If an economy is operating at a point inside the production possibilities curve,
a. its resources are not being used efficiently. b. the curve will begin to shift inward. c. the curve will begin to shift outward. d. This is a trick question because an economy cannot produce at a point inside the curve.
What can be understood through the production function?
a. the monetary cost of inputs in relation to the sale price of outputs b. how many inputs are needed to produce a certain number of outputs c. the rate of change in output per added input compared with the change in cost d. the intrinsic value of operating the firm versus the firm’s monetary profits
(Exhibit: IS-LM Fiscal Policy) Based on the graph, starting from equilibrium at interest rate r1 and income Y1, a tax cut would generate the new equilibrium combination of interest rate and income:
What will be an ideal response?