Which of the government policies below is not likely to encourage per capita economic growth?
a. High taxes on companies that spend a lot on capital formation
b. The use of tax revenues for investment and capital formation
c. Special subsidies for capital-intensive forms of production
d. Promotion of education and training programs for workers
a
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The deficit can be defined in simple terms as
a. Tax receipts ? government expenditures + transfers. b. Tax receipts + government expenditures + transfers. c. Government expenditures + transfers ? tax receipts. d. Government expenditures ? transfers ? tax receipts.
Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars) for the three parties are listed below. WithFilterWithoutFilterGains to Erie$200$400Fisherman$180$50Bird Watchers$130$25Suppose you observe that Erie has not added a filter. You could conclude that the Coase theorem failed to solve the externality problem because:
A. regulators prevent application of the Coase theorem when the environment is at stake. B. negotiation with many individual fishermen and bird watchers was too costly. C. Erie's benefits to operating without a filter are greater than the benefits of a filter to the fishermen and bird watchers. D. Erie has a property right to the river.
Which of the following is true, other things equal?
A. A reduction in prices will increase the real wealth of those holding a fixed quantity of money. B. A reduction in prices will lead to a decline in net exports. C. A reduction in prices will increase the scarcity of money, raise the real interest rate, and, thereby, encourage investment and consumption. D. A reduction in prices will increase profit margins and, thereby, stimulate additional investment.