Which of the main economic schools of thought would believe that the government should undertake a tax policy stressing work and investment incentives?
A. Rational expectations
B. Classical
C. Supply-side
D. Keynesian
C. Supply-side
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How does an increase in expected profit affect investment demand and the demand for loanable funds curve?
What will be an ideal response?
All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,
a. the increase in output was greater for this year than last year. b. the increase in output was greater last year than this year. c. the increase in output is the same in both years. d. None of the above is necessarily correct.
Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of:
A. inconsistent reasoning; saving $20 is saving $20. B. rational choice because saving 40 percent is better than saving 4 percent. C. inconsistent reasoning because prices are sunk costs. D. the proper application of the Cost-Benefit Principle.
Which of the following is not a bank asset?
A. Mortgage loans B. Reserves C. Securities D. Non-transaction deposits