Supply-side tax cuts designed to increase investment spending are attractive in theory, but in practice
a. the effect is the opposite of what theory suggests.
b. are less useful, because they take a long time to increase the capital stock.
c. they have no effect on the capital stock in the short or long run.
d. are powerful in the short run as capital stock rapidly increases, but the effect tapers off in the long run.
b
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Frictional unemployment arises when
A) unskilled or low-skilled workers find it difficult to obtain desirable, long-term jobs. B) labor must be reallocated from industries that are shrinking to areas that are growing. C) workers must search for suitable jobs and firms must search for suitable workers. D) output and employment are below full-employment levels.
With a rise in government expenditure we
A) move up along an aggregate demand curve. B) move down along an aggregate demand curve. C) shift the aggregate demand curve to the right. D) shift the aggregate demand curve to the left.
What are the two reasons for the government to intervene in a market?
Which of the following is not true of Keynes?
A. Professor at Cambridge B. Wrote the book The General Theory of Employment, Interest and Money C. Big fan of monetary policy D. Active in the arts E. Focused on the short run