Question Details

When comparing an increase in government spending on goods and services 



1. An economist claims that a government fiscal policy to increase income by $2b will not create much upward pressure on prices. He/she must believe that the 
a) aggregate supply curve is flat b) aggregate demand curve is flat 
c) aggregate supply curve is steep d) aggregate demand curve is steep 
2. The Laffer curve 
a) shows how the tax rate affects GDP b) shows how the tax rate affects tax receipts 
c) shows how the tax rate affects the budget deficit 
d) shows how the tax rate affects incentives to spend 
3. When comparing an increase in government spending on goods and services to an increase in private investment spending, in the short run 
a) they will both shift aggregate supply b) they will both shift aggregate demand 
c) government spending is inflationary; private investment is not 
d) government spending must equal taxes; private investment must equal saving 
4. "The net effect of the proposed Clinton taxes would be to raise the marginal tax rate of typical employees by more than 15 percentage points. The White House appears unaware that taxes do more than transfer money from individuals to the government. High marginal tax rates also distort _______ " The blank is best filled with 
a) policy rules b) the meaning of a budget deficit 
c) incentives to work, save and invest 
d) the operation of the money multiplier 
5. "The share of taxes paid by the top one-half percent of income-earners rose to 18% in 1984-85 from 14% in 1981, despite (or rather because of) the reduction in the top marginal tax rate." This most likely happened because 
a) the budget deficit fell b) the economy grew dramatically 
c) top income earners avoided less tax 
d) more people moved into the top one-half percent


Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help