As the economy declines, the collection of personal income tax revenues automatically falls. This relationship best describes how the progressive income tax system:
A. offsets the timing problem for fiscal policy.
B. provides built-in stability for the economy.
C. increases crowding out in the economy.
D. decreases real interest rates in the economy.
Answer: B
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Government assistance to workers whose employment prospects have worsened is called:
A. the minimum wage. B. worker mobility payments. C. transition aid. D. social security.
According to new classical school of economics, the aggregate supply curve is:
a. horizontal in both the short run and the long run. b. vertical in the short run and upward-sloping in the long run. c. upward-sloping in both the short run and the long run. d. vertical in both the short run and the long run. e. upward-sloping in the short run and vertical in the long run.
A larger error variance makes it difficult to estimate the partial effect of any of the independent variables on the dependent variable.
Answer the following statement true (T) or false (F)
When the output per hour of workers is high, the real wages of the workers will also be high.
A. True B. False