Question 1

Phillips developed a curve that shows the trade-off between the

Accepted Answer

A) Full employment rate and interest rates. 
B) Unemployment rate and inflation rates. 
C) Full employment rate and the natural rate of unemployment. 
D) Natural rate of unemployment and exchange rates. 
A) Full employment rate and interest rates. 
B) Unemployment rate and inflation rates. 
C) Full employment rate and the natural rate of unemployment. 
D) Natural rate of unemployment and exchange rates. B

Question 2

The tools of demand-side macroeconomic policy are the money supply and prices.

Accepted Answer

A) True 
 B)False  False

Question 3

It is likely that people will work less when the marginal tax rate is

Accepted Answer

A) 91 percent. 
B) 30 percent. 
C) 26 percent. 
D) 2 percent. 
A) 91 percent. 
B) 30 percent. 
C) 26 percent. 
D) 2 percent. A

Question 4

Rightward AS shifts will cause

Accepted Answer

A) Leftward Phillips curve shifts. 
B) Rightward Phillips curve shifts. 
C) Movements up and to the left along the existing Phillips curve. 
D) Movements down and to the right along the existing Phillips curve. 
A) Leftward Phillips curve shifts. 
B) Rightward Phillips curve shifts. 
C) Movements up and to the left along the existing Phillips curve. 
D) Movements down and to the right along the existing Phillips curve.

Question 5

The Economy Tomorrow article titled "Rebuilding America" states that

Accepted Answer

A) The transportation system is keeping up with a growing economy. 
B) The transportation system is not keeping up with a growing economy. 
C) The nation currently spends less than 2 billion hours in traffic delays and it should decline over the next decade. 
D) None of the choices are correct. 
A) The transportation system is keeping up with a growing economy. 
B) The transportation system is not keeping up with a growing economy. 
C) The nation currently spends less than 2 billion hours in traffic delays and it should decline over the next decade. 
D) None of the choices are correct.

Question 6

Which of the following can cause a leftward shift in the aggregate supply curve?

Accepted Answer

A) A major natural disaster such as hurricane or earthquake. 
B) Lower marginal tax rates. 
C) A bumper agricultural crop. 
D) Trade liberalization. 
A) A major natural disaster such as hurricane or earthquake. 
B) Lower marginal tax rates. 
C) A bumper agricultural crop. 
D) Trade liberalization.

Question 7

An improvement in the infrastructure of a country,ceteris paribus,should result in a lower price level and increased employment.

Accepted Answer

A) True 
 B)False

Question 8

A World View article titled "Japan Sees Quake Damage Bill of Up to $309 Billion,Almost Four Katrinas" implies that the most likely impact of this destruction would be

Accepted Answer

A) An increase in aggregate demand. 
B) An increase in aggregate supply. 
C) A decrease in aggregate demand. 
D) A decrease in aggregate supply. 
A) An increase in aggregate demand. 
B) An increase in aggregate supply. 
C) A decrease in aggregate demand. 
D) A decrease in aggregate supply.

Question 9

Supply-side tax cuts are designed to

Accepted Answer

A) Reduce marginal tax rates. 
B) Increase the equity of the tax system. 
C) Remove as much disposable income as possible from the economy. 
D) Shift the Phillips curve to the right. 
A) Reduce marginal tax rates. 
B) Increase the equity of the tax system. 
C) Remove as much disposable income as possible from the economy. 
D) Shift the Phillips curve to the right.

Question 10

Which view of aggregate supply predicts that the outcomes of fiscal and monetary policy depend on how close the economy is to full employment?

Accepted Answer

A) The Keynesian view. 
B) The monetarist view. 
C) The hybrid view. 
D) The Keynesian view,the monetarist view,and the hybrid view. 
A) The Keynesian view. 
B) The monetarist view. 
C) The hybrid view. 
D) The Keynesian view,the monetarist view,and the hybrid view.

Question 11

A decrease in marginal tax rates will cause entrepreneurship to ________ and AS to shift to the ________.

Accepted Answer

A) increase;left 
B) increase;right 
C) decrease;left 
D) decrease;right 
A) increase;left 
B) increase;right 
C) decrease;left 
D) decrease;right

Question 12

Supply-side economists favor tax incentives that

Accepted Answer

A) Discourage saving and encourage spending. 
B) Discourage infrastructure development. 
C) Increase the level of government regulation. 
D) Encourage investment. 
A) Discourage saving and encourage spending. 
B) Discourage infrastructure development. 
C) Increase the level of government regulation. 
D) Encourage investment.

Question 13

In 2001 and 2002,the Bush administration ________ personal and business taxes,which should cause AS to ________.

Accepted Answer

A) decreased;increase 
B) increased;increase 
C) decreased;decrease 
D) increased;decrease 
A) decreased;increase 
B) increased;increase 
C) decreased;decrease 
D) increased;decrease

Question 14

According to supply-side theorists,taxes

Accepted Answer

A) Alter disposable income only. 
B) Alter disposable income and affect the incentives to work only. 
C) Alter disposable income and affect the incentives to work and produce. 
D) None of the choices are correct. 
A) Alter disposable income only. 
B) Alter disposable income and affect the incentives to work only. 
C) Alter disposable income and affect the incentives to work and produce. 
D) None of the choices are correct.

Question 15

Stagflation refers to

Accepted Answer

A) Inflation resulting from lower unemployment rates. 
B) The simultaneous occurrence of higher inflation and higher unemployment rates. 
C) Negative inflation rates. 
D) Simultaneous decreases in inflation rate and unemployment rate. 
A) Inflation resulting from lower unemployment rates. 
B) The simultaneous occurrence of higher inflation and higher unemployment rates. 
C) Negative inflation rates. 
D) Simultaneous decreases in inflation rate and unemployment rate.

Question 16

According to supply-side economists,what impact do mandatory benefits have?

Accepted Answer

A) They reduce payroll costs and shift AS to the right. 
B) They reduce payroll costs and shift AS to the left. 
C) They increase payroll costs and shift AS to the right. 
D) They increase payroll costs and shift AS to the left. 
A) They reduce payroll costs and shift AS to the right. 
B) They reduce payroll costs and shift AS to the left. 
C) They increase payroll costs and shift AS to the right. 
D) They increase payroll costs and shift AS to the left.

Question 17

What does the Phillips curve illustrate,and what changes in the AS-AD model support this relationship?

Accepted Answer

The Phillips curve illustrates the inver

Question 18

A leftward shift in aggregate demand will cause a decrease in both output and price level if aggregate supply is

Accepted Answer

A) Upward-sloping to the right. 
B) Vertical. 
C) Downward-sloping to the right. 
D) Horizontal. 
A) Upward-sloping to the right. 
B) Vertical. 
C) Downward-sloping to the right. 
D) Horizontal.

Question 19

What are some of the policy tools used by supply-side economists,and how do they work?

Accepted Answer

Supply-side policy tools include a decre

Question 20

If the absolute value of the tax elasticity of supply is 8,a tax cut of 0.5 percent should cause the output supplied to

Accepted Answer

A) Increase by 16 percent. 
B) Decrease by 16 percent. 
C) Increase by 4 percent. 
D) Decrease by 4 percent. 
A) Increase by 16 percent. 
B) Decrease by 16 percent. 
C) Increase by 4 percent. 
D) Decrease by 4 percent.

Exam 16: Supply-Side Policy: Short-Run Options

Phillips developed a curve that shows the trade-off between the

The tools of demand-side macroeconomic policy are the money supply and prices.

It is likely that people will work less when the marginal tax rate is

Rightward AS shifts will cause

The Economy Tomorrow article titled "Rebuilding America" states that

Which of the following can cause a leftward shift in the aggregate supply curve?

An improvement in the infrastructure of a country,ceteris paribus,should result in a lower price level and increased employment.

A World View article titled "Japan Sees Quake Damage Bill of Up to $309 Billion,Almost Four Katrinas" implies that the most likely impact of this destruction would be

Supply-side tax cuts are designed to

Which view of aggregate supply predicts that the outcomes of fiscal and monetary policy depend on how close the economy is to full employment?

A decrease in marginal tax rates will cause entrepreneurship to ________ and AS to shift to the ________.

Supply-side economists favor tax incentives that

In 2001 and 2002,the Bush administration ________ personal and business taxes,which should cause AS to ________.

According to supply-side theorists,taxes

Stagflation refers to

According to supply-side economists,what impact do mandatory benefits have?

What does the Phillips curve illustrate,and what changes in the AS-AD model support this relationship?

A leftward shift in aggregate demand will cause a decrease in both output and price level if aggregate supply is

What are some of the policy tools used by supply-side economists,and how do they work?

If the absolute value of the tax elasticity of supply is 8,a tax cut of 0.5 percent should cause the output supplied to

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

A decrease in marginal tax rates will cause entrepreneurship to and AS to shift to the .

In 2001 and 2002,the Bush administration personal and business taxes,which should cause AS to .