What is supply-side economics, and how does it differ from the Keynesian emphasis on fiscal policy?
Supply-side economics focuses on reductions in marginal tax rates and the incentives those reductions can create. Lower marginal tax rates increase the relative attractiveness of productive activity and can stimulate output. In contrast, standard Keynesian theory focuses on how demand stimulus can increase output.
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How is the price of a financial asset, such as government bonds, related to the interest rate?
What will be an ideal response?
The majority of small businesses
A) are privately owned. B) are managed by professional managers. C) raise funds in financial markets. D) are self-financing.
A fall in the government's budget deficit will lower
A) equilibrium GDP and consumption. B) consumption and saving. C) saving and GDP. D) All of the above are correct.
Land owners with secure and protected property rights are motivated to
(a) use their land productively. (b) maintain their land and its value as long as the land is owned privately and profits are realized by the land owners. (c) not hold their land idle if they face property taxes due to costs imposed by the tax system. (d) link land ownership and personal freedom.