Critics of supply-side economics argue that
a. tax cuts do not affect supply, only demand.
b. supply-siders exaggerate the effects of tax cuts.
c. incentives have no effect on behavior.
d. the goals of supply-siders are not supported by most economists.
b
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If aggregate expenditure in an economy equals 1,000 + 0.9Y and full employment real GDP equals 9,000, then this economy has
A. an inflationary gap. B. no output gap. C. a recessionary gap. D. no autonomous expenditure.
Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is TRUE?
A) The relative price of coffee has increased compared to tea. B) The money price of coffee has increased. C) The law of supply explains why the price of coffee has increased. D) Jane will stop consuming coffee.
Jody has purchased a non-refundable $75 ticket to attend a Miley Cyrus concert on Friday night. Subsequently, she is asked to go to out dinner at no expense to her. If she uses cost-benefit analysis to choose between going to the concert and going out to dinner, the opportunity cost of going out to dinner should include:
A. only the cost of concert ticket. B. neither the cost of the ticket nor the entertainment value of the concert. C. only the entertainment value of the concert. D. the cost of the ticket plus the entertainment value of the concert.
A fall in the price level
A. causes exports to rise and imports to fall, leading to an increase in total planned real expenditures. B. leads to an increase in total planned real expenditures because of the indirect effect. C. increases the real value of money balances, which causes borrowing to decrease, leading to a decrease in investment and total planned real expenditures. D. causes total planned real expenditures to increase as long as the fall is less than the fall in the price level in other countries.