The level of aggregate output that can be sustained in the long run without inflation is known as
A. nominal output.
B. potential output.
C. real output.
D. money output.
Answer: B
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The Laffer curve
A) initially slopes upward as increasing tax rates lead to increasing tax revenue but eventually will slope downward as increasing tax rates lead to decreasing tax revenue. B) slopes upward throughout its range since increasing tax rates will always lead to increases in tax revenue. C) is horizontal because tax revenue is independent of the rate of interest. D) slopes downward throughout its range since increasing tax rates will always lead to decreases in tax revenue.
If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively
a. inelastic. b. elastic. c. robust. d. inverse.
The following include several reasons that government might give for using a tariff on imports? Which is not valid, in the sense that the effect described will not happen.
a. To raise government revenue. b. To help consumers. c. To raise incomes of producers. d. To respond to political pressures from import competing industries. e. To increase national welfare at the expense of foreigners.
The process of financial intermediation:
A. is always used when a borrower needs to obtain funds. B. creates a net cost to an economy. C. increases the economy's ability to produce. D. is used primarily in underdeveloped countries.