Question Details

Should taxes be reduced on corporate profits



1. "He favors a slow recovery, for example, partly because the 'natural rate of unemployment' may turn out to be higher than anyone thinks." The rationale behind the suggestion that policy should push the economy out of recession slowly rather than quickly is that 
a) if the natural rate of unemployment is overestimated inflation could be created 
b) if the natural rate of unemployment is underestimated inflation could be created 
c) if the natural rate of unemployment is overestimated a recession could be created 
d) if the natural rate of unemployment is underestimated a recession could be created 
2. "There is little doubt that the key reason for this slide toward ever more inflation was an effort by public policy in most countries to achieve and maintain more output and employment from their economies than was consistent with price stability." This most likely has resulted from 
a) a rise in taxes b) an underestimation of the NRU 
c) an increase in government spending 
d) an overestimation of price increases by workers 
3. "The gap between actual and potential output for this year is estimated to be about 8% of potential output. Wholesale prices are virtually unchanged from one year ago. Unemployment is 9%, the same level as 6 months ago." Which of the following stabilization policies would be most appropriate? 
a) a higher minimum wage b) increases in income taxes 
c) an increase in government spending 
d) reductions in unemployment insurance benefits 31 
4. "The Reagan people are currently arguing over what level of tax cuts should be implemented. What if they're wrong? What if the supply side doesn't respond enough to at least take care of the foregone revenues?" What is the implication of the supply side not responding enough to take care of the foregone revenues? 
a) lower output b) higher inflation c) higher budget deficit d) higher unemployment 
5. "Should taxes be reduced on corporate profits? It seems the nation is faced with a trade-off between growth and redistribution: Does it want to split a smaller pie equally or a larger pie less equally? The 'difference principle,' advocated by Harvard philosopher John Rawls, in his book 'A Theory of Justice,' holds that inequality can be justified only if it works to the absolute benefit of the least advantaged." The intention of this policy, in terms of meeting Rawls's difference principle, is that 
a) the rich would be taxed more than the poor 
b) the rich would suffer more unemployment than the poor 
c) the rich would become poorer and the poor would become richer 
d) the rich would become a lot richer and the poor would become a little richer



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