Use the following list of modern macroeconomic theories in order to describe the following statement: Lower tax rates and less government intervention in the private economy is the only way to stimulate saving, investment, and productivity.
A. Monetarism
B. The theory of rational expectations
C. New classical economics
D. Supply-side economics
D. Supply-side economics
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What is a market economy?
What will be an ideal response?
Based on the graphic for perfect competition versus monopoly, the deadweight loss for a monopoly is ______.
a. area a
b. area b
c. area c
d. zero
A temporary decrease in government purchases causes the real interest rate to ________ and the price level to ________ in general equilibrium.
A. rise; rise B. rise; fall C. fall; rise D. fall; fall
A constitutional amendment is passed that requires the government to have an annually balanced budget in the sense that changes in spending should be matched by equivalent changes in taxes. Should the government desire to increase GDP by $25 billion and meet the provisions of the law it:
A. Cannot possibly reach its objective without breaking the law B. Could increase spending by $25 billion and reduce taxes by $25 billion C. Could increase spending by $25 billion and increase taxes by $25 billion D. Could increase spending by $30 billion and increase taxes by $25 billion