Why were economists concerned about the timing of President Trump's major tax cut law that was enacted in December 2017?
What will be an ideal response?
Economists were concerned because the major tax cut law was signed during the time when the U.S. economy was near full employment. Since the tax cut would shift the aggregate demand to the right at the time when the economy was already near its full employment level of output, the tax cut could potentially cause an increase in inflation in the economy.
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The basic economic problem of scarcity
A) is a problem only in developing economies. B) does not apply to the wealthy in society. C) has always existed and will continue to exist. D) will eventually disappear as technology continues to advance.
Suppose that the one-year forward price of euros in terms of dollars is equal to $1.113 per euro. Further, assume that the spot exchange rate is $1.05 per euro, and the interest rate on dollar deposits is 10 percent and on euro it is 4 percent
Under these assumptions A) interest parity does not hold. B) interest parity does hold. C) it is hard to tell whether interest parity does or does not hold. D) Not enough information is given to answer the question. E) interest parity fluctuates.
When a monopolist increases output, total revenue will:
A. increase if the price effect outweighs the quantity effect. B. decrease if the quantity effect outweighs the price effect. C. increase if the quantity effect outweighs the price effect. D. increase but it will have no price effect.
What is the type of mechanism that answers the basic economic questions through a decentralized decision making process?
A. dictatorship B. market system C. command and control D. mixed economic system