A tax cut designed to encourage investment and stimulate economic growth
a. must be matched by a cut in government spending in order to be effective
b. must be matched with tax increases in other areas, or with a cut in government spending, if crowding out is to be avoided
c. will only work if it decreases the size of the budget deficit
d. can only be effective if the tax burden is redistributed or government spending is cut
e. will only work if it is a cut in the capital gains tax
B
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Consider the market for peanut butter. If there is an increase in the price of peanuts,
A) there is a decrease in the supply of peanuts. B) there is a decrease in the demand for peanut butter. C) there is an upward movement along the supply curve for peanut butter. D) there is a decrease in the supply of peanut butter. E) the supply curve for peanuts shifts rightward.
Refer to the above figure. Suppose E is the original equilibrium. An increase in the U.S. demand for Japanese-made goods will lead to
A) a depreciation of the yen and an increase in the quantity of yen sold per week. B) a depreciation of the yen and a decrease in the quantity of yen sold per week. C) an appreciation of the yen and an increase in the quantity of yen sold per week. D) an appreciation of the yen and a decrease in the quantity of yen sold per week.
Suppose it is discovered that consumption of chocolate leads to a longer life. This information would lead to
A. an increase in quantity demanded of chocolate. B. a decrease in demand for chocolate. C. an increase in demand for chocolate. D. a decrease in quantity demanded of chocolate.
Under a fixed exchange rate regime, suppose there is an increase in housing wealth that causes an increase in consumption. This wealth-induced increase in consumption will cause
A) an increase in investment. B) a reduction in net exports. C) an increase in imports. D) all of the above E) none of the above