Lower personal income taxes
A) increase aggregate demand.
B) decrease disposable income.
C) decrease aggregate demand.
D) increase transfer payments.
Answer: A
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The best economic case one can make for an active industrial policy involves
A) the national security argument. B) the technological spillover argument. C) the environment preservation argument. D) the high value added argument. E) raising the national income.
Explain why wage rates might rise at Joe's Quik-Print Shop if Joe replaces his aging copy machines with state-of-the-art copy machines
In the 1960s, U.S. economy experienced
a. a substantial decline in real GDP but limited inflation. b. a substantial decline in real GDP coupled with significant inflation. c. substantial real GDP growth coupled with significant inflation. d. substantial real GDP growth with limited inflation.