Use the figure below to answer the following question(s). Figure 12-1 -Refer to Figure 12-1. If the output of the economy is Y1, which of the following would a new classical economist be most likely to favor?

A) a reduction in government expenditures B) a reduction in taxes C) an increase in taxes D) continuation of the current tax and expenditure policies A) a reduction in government expenditures B) a reduction in taxes C) an increase in taxes D) continuation of the current tax and expenditure policies

Exam 12: Fiscal Policy, Incentives, and Secondary Effects

Supply-side economics concentrates on the benefits of reducing marginal tax rates. Describe three ways that high marginal tax rates are likely to retard output growth.

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Question 1

Correct Answer:

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The most direct way that high tax rates retard output is that they simply discourage work. Individuals who get to keep little of what they make are not motivated to produce. High marginal rates also reduce capital formation as both domestic and foreign investors seek lower taxed investments abroad. Finally, high rates create inefficiencies because individuals do not bear the full costs of tax-deductible purchases. People will substitute less-desired but tax-deductible goods for more-desired, nondeductible goods. Resources are, thus, used to produce goods that may not be valued as much as the cost of producing them.

Which of the following tends to make the size of a shift in aggregate demand resulting from a tax change smaller than would otherwise be the case?

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Question 2

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The new classical model states that a

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Question 3

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Which of the following attributes of the recession of 2008-2009 is most supportive of the Keynesian view that the crowding-out effect will be minimal during a severe recession?

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Question 4

According to the Keynesian view, the proper response to a severe recession would be

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Question 5

If policymakers cut taxes because they perceive that recession is a major threat, a proponent of the new classical view will be most likely to argue that the tax cut is

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Question 6

Which one of the following is an area of agreement among modern macroeconomists with regard to the use of fiscal policy?

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Question 7

According to non-Keynesians, how will an increase in government spending financed by borrowing during a recession affect recovery?

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Question 8

Which of the following is part of the synthesis view of fiscal policy?

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Question 9

The modern synthesis view of fiscal policy stresses

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Question 10

The crowding-out effect stresses that

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Question 11

Crowding out refers to the situation in which

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Question 12

Supply-side economic policies are best viewed as

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Question 13

The coordination problem accompanying expansionary fiscal policy refers to

(Multiple Choice)

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Question 14

Use the figure below to answer the following question(s). Figure 12-3 -Refer to Figure 12-3. If an economy is currently operating at Y₁, which of the following would a Keynesian economist be most likely to favor?

(Multiple Choice)

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Question 15

Which of the following countries have experienced recession and high levels of unemployment related to their inability to control the growth of government and high levels of debt?

(Multiple Choice)

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Question 16

If a budget surplus leads to a decrease in U.S. real interest rates, the lower rates will tend to cause

(Multiple Choice)

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Question 17

The crowding-out effect suggests that

(Multiple Choice)

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Question 18

The paradox of excessive consumption argues that when households spend all they earn,

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Question 19

Use the figure below to answer the following question(s). Figure 12-1 -Refer to Figure 12-1. If the output of the economy is Y₁, which of the following would a new classical economist be most likely to favor?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 146

Supply-side economics concentrates on the benefits of reducing marginal tax rates. Describe three ways that high marginal tax rates are likely to retard output growth.

Which of the following tends to make the size of a shift in aggregate demand resulting from a tax change smaller than would otherwise be the case?

The new classical model states that a

Which of the following attributes of the recession of 2008-2009 is most supportive of the Keynesian view that the crowding-out effect will be minimal during a severe recession?

According to the Keynesian view, the proper response to a severe recession would be

If policymakers cut taxes because they perceive that recession is a major threat, a proponent of the new classical view will be most likely to argue that the tax cut is

Which one of the following is an area of agreement among modern macroeconomists with regard to the use of fiscal policy?

According to non-Keynesians, how will an increase in government spending financed by borrowing during a recession affect recovery?

Which of the following is part of the synthesis view of fiscal policy?

The modern synthesis view of fiscal policy stresses

The crowding-out effect stresses that

Crowding out refers to the situation in which

Supply-side economic policies are best viewed as

The coordination problem accompanying expansionary fiscal policy refers to

Use the figure below to answer the following question(s). Figure 12-3 -Refer to Figure 12-3. If an economy is currently operating at Y₁, which of the following would a Keynesian economist be most likely to favor?

Which of the following countries have experienced recession and high levels of unemployment related to their inability to control the growth of government and high levels of debt?

If a budget surplus leads to a decrease in U.S. real interest rates, the lower rates will tend to cause

The crowding-out effect suggests that

The paradox of excessive consumption argues that when households spend all they earn,

Use the figure below to answer the following question(s). Figure 12-1 -Refer to Figure 12-1. If the output of the economy is Y₁, which of the following would a new classical economist be most likely to favor?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 12: Fiscal Policy, Incentives, and Secondary Effects

Supply-side economics concentrates on the benefits of reducing marginal tax rates. Describe three ways that high marginal tax rates are likely to retard output growth.

Which of the following tends to make the size of a shift in aggregate demand resulting from a tax change smaller than would otherwise be the case?

The new classical model states that a

Which of the following attributes of the recession of 2008-2009 is most supportive of the Keynesian view that the crowding-out effect will be minimal during a severe recession?

According to the Keynesian view, the proper response to a severe recession would be

If policymakers cut taxes because they perceive that recession is a major threat, a proponent of the new classical view will be most likely to argue that the tax cut is

Which one of the following is an area of agreement among modern macroeconomists with regard to the use of fiscal policy?

According to non-Keynesians, how will an increase in government spending financed by borrowing during a recession affect recovery?

Which of the following is part of the synthesis view of fiscal policy?

The modern synthesis view of fiscal policy stresses

The crowding-out effect stresses that

Crowding out refers to the situation in which

Supply-side economic policies are best viewed as

The coordination problem accompanying expansionary fiscal policy refers to

Use the figure below to answer the following question(s). Figure 12-3 -Refer to Figure 12-3. If an economy is currently operating at Y1, which of the following would a Keynesian economist be most likely to favor?

Which of the following countries have experienced recession and high levels of unemployment related to their inability to control the growth of government and high levels of debt?

If a budget surplus leads to a decrease in U.S. real interest rates, the lower rates will tend to cause

The crowding-out effect suggests that

The paradox of excessive consumption argues that when households spend all they earn,

Use the figure below to answer the following question(s). Figure 12-1 -Refer to Figure 12-1. If the output of the economy is Y1, which of the following would a new classical economist be most likely to favor?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Use the figure below to answer the following question(s). Figure 12-3 -Refer to Figure 12-3. If an economy is currently operating at Y₁, which of the following would a Keynesian economist be most likely to favor?

Use the figure below to answer the following question(s). Figure 12-1 -Refer to Figure 12-1. If the output of the economy is Y₁, which of the following would a new classical economist be most likely to favor?