A basic criticism of supply-side economics is that:
A. empirical research clearly shows that incentives to work and invest vary directly with
marginal tax rates.
B. lower taxes will increase aggregate supply much more than they will increase aggregate
demand.
C. lower taxes will increase aggregate demand much more than they will increase aggregate
supply.
D. higher taxes will reduce incentives to work, invest, and innovate.
C. lower taxes will increase aggregate demand much more than they will increase aggregate
supply.
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Keynes argued that
I. Capitalism did not always lead to full employment. II. Nominal prices were more important than relative prices. A) I only B) II only C) Both I and II D) Neither I nor II
Explain what the slope of the income consumption curve shows about the income elasticity of demand
What will be an ideal response?
Median voter decisions may not yield efficient allocations of resources because:
a. votes are allocated differently than income. b. externalities may cause private and social costs to diverge. c. free riders will cause too few public goods to be produced. d. the median voter may not be the same as the mean voter.
If U.S. monetary authorities want to strengthen the dollar, they will
a. sell dollars in the foreign exchange market b. buy dollars in the foreign exchange market c. declare the dollar devalued d. sell dollars and buy only Euros in the foreign exchange market e. encourage other central bankers to sell dollars in the foreign exchange market