Exam 11: Monopolistic Competition, oligopoly, and Game Theory

Suppose the government attempts to stimulate the economy by increasing spending without increasing taxes.Which of the following statements is most likely to be accepted by someone who believes in crowding out?

Crowding out results when an increase in government spending leads to declines in consumption,investment,and/or net exports.

Suppose the economy is at a point below its institutional production possibilities frontier.To improve this situation,Keynesian economists might propose that the government should __________ expenditures,which will cause the aggregate demand curve to shift to the __________ in an attempt to close this __________ gap.

Describe the fiscal policy remedies that a Keynesian economist might prescribe to close a recessionary gap.How might the issue of crowding out impact the effectiveness of these policies?

According to the textbook (based upon 2014 data),if the bottom half of all U.S.income tax payers were allowed to stop paying the income tax entirely and the top 50% continued to pay as they do now,tax revenues to the government would drop by about

At a taxable income of $50,000 Mari's income tax is $10,500.When her taxable income rises to $55,000 her income tax is $11,750.Based on this information,what is Mari's marginal tax rate?

Explain the difference between a progressive income tax,a proportional income tax and a regressive income tax.Under which type of system is the federal income tax?

If an economist recommends that the government reduce the tax rate in order to increase tax revenues (based on the Laffer curve),she is implicitly assuming that the economy is currently operating at a point

-Use the information provided in Exhibit 11-4.What is the marginal tax rate on the 42,001st dollar of taxable income earned?

-Refer to Exhibit 11-2.At the highest point above the horizontal axis,tax revenues

A tax rate increase always leads to an increase in tax revenue for the government.

The United States currently has a progressive income tax structure.

The economy is in a recessionary gap.There is no crowding out and government has correctly estimated that to bring the economy into long-run equilibrium it should raise government purchases by $123 billion.If government purchases are raised by $123 billion,does it follow that the economy will be moved into long-run equilibrium?

At a taxable income of $120,000 Adam's income tax is $30,500.When his taxable income rises to $130,000 his income tax is $34,500.Based on this information,Adam's marginal tax rate is _____________ percent and his new average tax rate is ____________ percent.

-Refer to Exhibit 11-1.The economy is currently at point 1.In this situation,supply-side economists would most likely propose _______________ to make the price level ______________ and Real GDP ___________.

A curve showing the relationship between tax rates and tax revenues is called a __________ curve.

The AD curve shifts to the right with a __________ in government purchases (G)or a __________ in taxes.

-Refer to Exhibit 11-4.If a person's taxable income is $50,000,how much does he pay in taxes?

The AD curve shifts to the left with a __________ in government purchases (G)or a __________ in taxes.

A budget surplus