Supply-side economists argue that decreasing marginal tax rates
A) increases productivity and shifts the AS curve to the right.
B) increases productivity and shifts the AS curve to the left.
C) increases productivity and shifts the AD curve to the left.
D) due to the Ricardian equivalence, has no impact on the economy.
Ans: A) increases productivity and shifts the AS curve to the right.
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An exchange rate that varies according to supply and demand for the currency in the foreign exchange market is called a ________ exchange rate.
A. flexible B. nominal C. fixed D. real
What would likely happen to the long-run aggregate supply curve if the U.S. federal government decreases marginal tax rates on wages?
A. The LRAS curve would shift leftward. B. The LRAS curve would remain stable while the AD curve would shift leftward. C. The LRAS curve would shift rightward. D. The LRAS curve would remain stable while the AD curve would shift rightward.
When analyzing the effects of cost shocks, the shape of the aggregate demand curve is irrelevant.
Answer the following statement true (T) or false (F)
The seller passes on the entire tax to the consumer when demand is _____.
Fill in the blank(s) with the appropriate word(s).