Discuss some of the general conclusions arrived at about supply-side tax initiatives.
What will be an ideal response?
1. The likely effectiveness of supply-side tax cuts depends on what kinds of taxes are cut. Tax reductions aimed at stimulating business investment are likely to pack more punch than tax reductions aimed at getting people to work longer hours or to save more.2. Such tax cuts probably will increase aggregate supply much more slowly than they increase aggregate demand. Thus, supply-side policies should not be regarded as a substitute for short-run stabilization policy but, rather, as a way to promote faster economic growth in the long run.3. Demand-side effects of supply-side tax cuts are likely to overwhelm supply-side effects in the short run.4. Supply-side tax cuts are likely to widen income inequalities.5. Supply-side tax cuts are almost certain to lead to larger budget deficits.
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When the exchange rate between the U.S. dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has ________ and European goods have become ________ to people in the United States so that quantity of U.S
dollars supplied ________. A) appreciated; more expensive; decreases B) depreciated; cheaper; increases C) depreciated; more expensive; decreases D) depreciated; cheaper; decreases E) appreciated; cheaper; increases
Under a pure command system of government, decisions are made by:
a. firms. b. households. c. the central government. d. banks.
A union that pursued a policy of restricting entry over time into the union would
A. see real wages hold constant over time at whatever premium they could get initially. B. generate rising real wages for its membership over time as long as demand for union workers increased over time. C. also have to negotiate to be sure that all the members were able to find jobs. D. fail to obtain benefits for their workers in excess of what the workers would get under open markets.
A line that is perfectly elastic has an elasticity of demand of zero.
Answer the following statement true (T) or false (F)