Which one of the following items is not accounted for in the flow of "net taxes" in the circular flow model with a government sector?
A. Salaries to military personnel, public school teachers, and government inspectors
B. Transfer payments such as Social Security benefits
C. Subsidies to farmers, airlines, and others
D. Proprietary income generated by public utilities and state lotteries
Answer: A
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Policymakers' use of stabilization policy to eliminate output gaps is more appropriate when an economy self corrects very ________ and when the output gap is very ________.
A. rapidly; small B. slowly; small C. rapidly; large D. slowly; large
Examples of incentive pay include
a. commission sales b. providing onsite parking for employees c. cleaning the worksite with weekly janitorial service d. offering a certain number of sick days
A quota is one example of a protectionist policy.
a. true b. false
The curve that assumes that there is some tax rate beyond which the supply response is large enough to lead to a decrease in tax revenue for further increases in the tax rate is the
A. Lucas supply curve. B. Laffer curve. C. aggregate supply curve. D. aggregate production function.