Based on the Laffer Curve, a cut in the tax rate from 100 percent to a rate lower than the maximum-revenue rate will:
A. Decrease real GDP
B. Increase tax revenues
C. Decrease tax revenues
D. Have no effect on tax revenues
B. Increase tax revenues
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Refer to Table 4.2. In which scenario does the interest parity condition hold?
A) A B) B C) C D) D
Area income increases by 20 percent
a. Quantity demanded at Urban General does not change. b. Quantity demanded at Urban General falls by 10.0 percent. c. Quantity demanded at Urban General rises by 10.0 percent. d. Quantity demanded at St.Elsewhere rises by 7.0 percent. e. There is not enough information to tell what happens to quantity demanded at either hospital.
The multiplier effect occurs when:
A. spending by one person generates income for others and causes others to spend more too, increasing the impact of the initial spending on the economy. B. the level of consumer confidence increases more than predicted given a tax cut. C. increased spending by one or more individuals causes others to react and increase their savings. D. None of these is true.
Relating to the Economics in Practice on page 357: An individual with a parent who has Huntington's disease has a 50 percent chance of also having the disease, and can use this information when deciding on the purchase of health insurance. This is an example of ________ favoring potential insurance buyers.
A. moral hazard B. asymmetric information C. adverse selection D. market signaling