Your textbook highlights a debate that has been going on for some years. The issue is whether there should be a corporation tax, given that corporations are nothing more than groups of people. Should there be a corporation tax? Why or why not?
What will be an ideal response?
The debate will be answered by investigation whether a switch in taxing systems will generate
the same level of tax revenue without causing harm to the economy. Theoretical models have
yielded mixed results as to the effectiveness of a switch. It will have to be tested empirically to
know for sure.
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The key variable in determining changes in a country's standard of living is the
A. unemployment rate. B. long-run rate of economic growth. C. inflation rate. D. interest rate.
Explain the relationship between the real interest rate and the demand for loanable funds. Compare that relationship to the relationship between expected profit and the demand for loanable funds
What will be an ideal response?
Due to macroeconomics interdependence between large countries, the effect of a permanent fiscal expansion by Home is as follows: Home output
A) falls, Home's currency appreciates, Foreign output rises. B) rises, Home's currency appreciates, Foreign output rises. C) rises, Home's currency depreciates, Foreign output rises. D) rises, Home's currency appreciates, Foreign output decreases. E) falls, Homes currency depreciates, Foreign output rises.
Given an upward-sloping aggregate supply curve, which of the following is most likely to occur if the Fed sells bonds in the open market, ceteris paribus?
A. Greater inflation and more unemployment. B. Greater inflation and less unemployment. C. Lower average prices and less unemployment. D. Lower average prices and more unemployment.