Question 1

What is the difference between tax evasion and tax avoidance, and what is their relationship with tax rates?

Accepted Answer

Tax evasion is illegal and occurs when firms and individuals fail to declare all income which should be subject to tax.Tax avoidance is legal, but could be considered morally wrong when both firms and individuals exploit loopholes in the tax system.A high rate of tax increases the incentive for both tax evasion and avoidance.

Question 2

When the output gap is large, then the aggregate supply curve will tend to be close to

Accepted Answer

A) horizontal. 
B) 45 degrees. 
C) vertical. 
D) full employment. 
A) horizontal. 
B) 45 degrees. 
C) vertical. 
D) full employment. B

Question 3

Market orientated supply policies aim to improve price signals by rolling back the influence of the state.

Accepted Answer

A) True 
 B)False  True

Question 4

Higher tax rates

Accepted Answer

A) reduce the opportunity cost of leisure. 
B) increase the opportunity cost of leisure. 
C) has no impact on the opportunity cost of leisure. 
D) incentivize people to work harder. 
A) reduce the opportunity cost of leisure. 
B) increase the opportunity cost of leisure. 
C) has no impact on the opportunity cost of leisure. 
D) incentivize people to work harder.

Question 5

What is meant by freeing up the markets and improving market signals?

Accepted Answer

A more efficient market with effective p

Question 6

How can a government reduce the numbers of people who are voluntarily unemployed?

Accepted Answer

Some people on welfare benefits may be v

Question 7

Explain why the new Keynesian supply curve is vertical at full employment.

Accepted Answer

The new Keynesian supply curve is vertic

Question 8

The trade-off between an increase in both national income and price levels depends on how large the output gap is.

Accepted Answer

A) True 
 B)False

Question 9

Refer to Diagram 2 below.If supply side policies succeeded in shifting the aggregate supply curve to the right to AS₂ then a shift in aggregate demand curve from AD₁ to AD₂ would see national income Diagram 2

Accepted Answer

A) rise from Y₁ to Yf₂. 
B) rise from Y₁ to Y₂. 
C) rise from Yf₁ to Yf₂. 
D) rise from Y₂ to Yf₂. 
A) rise from Y₁ to Yf₂. 
B) rise from Y₁ to Y₂. 
C) rise from Yf₁ to Yf₂. 
D) rise from Y₂ to Yf₂.

Question 10

The new Keynesian short run aggregate supply is horizontal as it approaches full employment.

Accepted Answer

A) True 
 B)False

Question 11

Supply side policies focus on policies that

Accepted Answer

A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) shift the aggregate supply curve to the left. 
D) shift the aggregate supply curve to the right. 
A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) shift the aggregate supply curve to the left. 
D) shift the aggregate supply curve to the right.

Question 12

Raising the tax threshold serves to

Accepted Answer

A) increase the gap between welfare payments and potential earnings. 
B) make those on benefits less fussy about which job to go for. 
C) reduce those who are voluntarily unemployed. 
D) All of the above. 
A) increase the gap between welfare payments and potential earnings. 
B) make those on benefits less fussy about which job to go for. 
C) reduce those who are voluntarily unemployed. 
D) All of the above.

Question 13

Table 1
  
-Refer to Table 1 above.A person earning R100 100 pays income tax equal to

Accepted Answer

A) the same as someone earning R100 000. 
B) R30 030. 
C) R20 030. 
D) R40 more than someone earning R100 000. 
A) the same as someone earning R100 000. 
B) R30 030. 
C) R20 030. 
D) R40 more than someone earning R100 000.

Question 14

What is the output gap and why is it significant?

Accepted Answer

The output gap is the difference between

Question 15

Supply side policies became a focus of many governments

Accepted Answer

A) after the 1930s Great Depression/ 
B) in the 1960s and into the 1970s 
C) in the 1980s and into the 1990s 
D) after to 2008 economic crises 
A) after the 1930s Great Depression/ 
B) in the 1960s and into the 1970s 
C) in the 1980s and into the 1990s 
D) after to 2008 economic crises

Question 16

Higher tax rates reduce the opportunity cost of leisure.

Accepted Answer

A) True 
 B)False

Question 17

Reducing government spending leads to

Accepted Answer

A) a reduction in the crowding out effect. 
B) no change in the crowding out effect. 
C) an increase in the crowding out effect. 
D) less efficiency in the market. 
A) a reduction in the crowding out effect. 
B) no change in the crowding out effect. 
C) an increase in the crowding out effect. 
D) less efficiency in the market.

Question 18

Use a diagram to show how an increase in AS can lead to sustained growth of stable prices and increased national income even when accompanied by a boost in aggregate demand.

Accepted Answer

Without a shift in the AS curve, the res

Question 19

The Laffer curve shows the relationship between

Accepted Answer

A) employment and income tax rates. 
B) tax revenues and employment. 
C) tax revenues and income tax rates. 
D) VAT and income tax rates. 
A) employment and income tax rates. 
B) tax revenues and employment. 
C) tax revenues and income tax rates. 
D) VAT and income tax rates.

Question 20

Which is not an example of a flexible labour market?

Accepted Answer

A) The government tightens regulations on zero hour contracts. 
B) Firms have greater rights to make redundancies. 
C) The government passes a law reducing minimum redundancy payments. 
D) More recruitment websites. 
A) The government tightens regulations on zero hour contracts. 
B) Firms have greater rights to make redundancies. 
C) The government passes a law reducing minimum redundancy payments. 
D) More recruitment websites.

What is the difference between tax evasion and tax avoidance, and what is their relationship with tax rates?

When the output gap is large, then the aggregate supply curve will tend to be close to

Market orientated supply policies aim to improve price signals by rolling back the influence of the state.

Higher tax rates

What is meant by freeing up the markets and improving market signals?

How can a government reduce the numbers of people who are voluntarily unemployed?

Explain why the new Keynesian supply curve is vertical at full employment.

The trade-off between an increase in both national income and price levels depends on how large the output gap is.

Refer to Diagram 2 below.If supply side policies succeeded in shifting the aggregate supply curve to the right to AS₂ then a shift in aggregate demand curve from AD₁ to AD₂ would see national income Diagram 2

The new Keynesian short run aggregate supply is horizontal as it approaches full employment.

Supply side policies focus on policies that

Raising the tax threshold serves to

Table 1 -Refer to Table 1 above.A person earning R100 100 pays income tax equal to

What is the output gap and why is it significant?

Supply side policies became a focus of many governments

Higher tax rates reduce the opportunity cost of leisure.

Reducing government spending leads to

Use a diagram to show how an increase in AS can lead to sustained growth of stable prices and increased national income even when accompanied by a boost in aggregate demand.

The Laffer curve shows the relationship between

Which is not an example of a flexible labour market?

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

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Exam 18: Supply Side Policies

What is the difference between tax evasion and tax avoidance, and what is their relationship with tax rates?

When the output gap is large, then the aggregate supply curve will tend to be close to

Market orientated supply policies aim to improve price signals by rolling back the influence of the state.

Higher tax rates

What is meant by freeing up the markets and improving market signals?

How can a government reduce the numbers of people who are voluntarily unemployed?

Explain why the new Keynesian supply curve is vertical at full employment.

The trade-off between an increase in both national income and price levels depends on how large the output gap is.

Refer to Diagram 2 below.If supply side policies succeeded in shifting the aggregate supply curve to the right to AS₂ then a shift in aggregate demand curve from AD₁ to AD₂ would see national income Diagram 2

The new Keynesian short run aggregate supply is horizontal as it approaches full employment.

Supply side policies focus on policies that

Raising the tax threshold serves to

Table 1 -Refer to Table 1 above.A person earning R100 100 pays income tax equal to

What is the output gap and why is it significant?

Supply side policies became a focus of many governments

Higher tax rates reduce the opportunity cost of leisure.

Reducing government spending leads to

Use a diagram to show how an increase in AS can lead to sustained growth of stable prices and increased national income even when accompanied by a boost in aggregate demand.

The Laffer curve shows the relationship between

Which is not an example of a flexible labour market?

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters