Question 1

According to supply-side economists,government regulation of factor markets,such as OSHA,

Accepted Answer

A) Increases production costs and causes AS to decrease. 
B) Increases production costs and causes AS to increase. 
C) Decreases production costs and causes AS to decrease. 
D) Decreases production costs and causes AS to increase. 
A) Increases production costs and causes AS to decrease. 
B) Increases production costs and causes AS to increase. 
C) Decreases production costs and causes AS to decrease. 
D) Decreases production costs and causes AS to increase.

Question 2

According to supply-side theory,which of the following would cause a rightward shift in the aggregate supply curve?

Accepted Answer

A) Eliminating job search assistance. 
B) Increasing transfer payments to the unemployed. 
C) Eliminating government-funded training programs for the structurally unemployed. 
D) Lifting trade restrictions. 
A) Eliminating job search assistance. 
B) Increasing transfer payments to the unemployed. 
C) Eliminating government-funded training programs for the structurally unemployed. 
D) Lifting trade restrictions.

Question 3

Structural unemployment is unemployment caused by

Accepted Answer

A) Insufficient spending in the economy. 
B) A mismatch between the skills of job seekers and the requirements of available jobs. 
C) Individuals who have the skills employers need and who live in the same location as employers but who are changing jobs. 
D) Natural unemployment. 
A) Insufficient spending in the economy. 
B) A mismatch between the skills of job seekers and the requirements of available jobs. 
C) Individuals who have the skills employers need and who live in the same location as employers but who are changing jobs. 
D) Natural unemployment.

Question 4

The Phillips curve illustrates the

Accepted Answer

A) Inverse relationship between the unemployment rate and the inflation rate. 
B) Direct relationship between the unemployment rate and the inflation rate. 
C) Inverse relationship between the price level and the level of output. 
D) Direct relationship between the price level and the level of output. 
A) Inverse relationship between the unemployment rate and the inflation rate. 
B) Direct relationship between the unemployment rate and the inflation rate. 
C) Inverse relationship between the price level and the level of output. 
D) Direct relationship between the price level and the level of output.

Question 5

According to supply-side theorists,a decrease in marginal tax rates will provide the incentive to

Accepted Answer

A) Work less. 
B) Produce more. 
C) Invest less. 
D) Reduce regulation. 
A) Work less. 
B) Produce more. 
C) Invest less. 
D) Reduce regulation.

Question 6

A movement up the Phillips curve will cause

Accepted Answer

A) An increase in both unemployment and inflation. 
B) A decrease in both unemployment and inflation. 
C) A trade-off between unemployment and inflation. 
D) An outcome known as stagflation. 
A) An increase in both unemployment and inflation. 
B) A decrease in both unemployment and inflation. 
C) A trade-off between unemployment and inflation. 
D) An outcome known as stagflation.

Question 7

Which of the following causes stagflation?

Accepted Answer

A) Workers push costs upward and thereby initiate inflation. 
B) Wage increases equal productivity increases,thereby setting off inflation. 
C) A leftward shift in the aggregate demand curve. 
D) A leftward shift in the aggregate supply curve. 
A) Workers push costs upward and thereby initiate inflation. 
B) Wage increases equal productivity increases,thereby setting off inflation. 
C) A leftward shift in the aggregate demand curve. 
D) A leftward shift in the aggregate supply curve.

Question 8

The closer the economy is to capacity,the greater the risk that fiscal or monetary stimulus will cause

Accepted Answer

A) A decrease in the price level and no change in output. 
B) No change in the price level and no change in output. 
C) An increase in the price level and no change in output. 
D) Only an increase in output. 
A) A decrease in the price level and no change in output. 
B) No change in the price level and no change in output. 
C) An increase in the price level and no change in output. 
D) Only an increase in output.

Question 9

Which of the following would be most likely to result in stagflation?

Accepted Answer

A) Worker training programs. 
B) Growth of human capital. 
C) Lower illiteracy rates. 
D) Increased government regulations on industry. 
A) Worker training programs. 
B) Growth of human capital. 
C) Lower illiteracy rates. 
D) Increased government regulations on industry.

Question 10

According to the consensus view,when demand increases near full employment,

Accepted Answer

A) The price level increases,but real GDP stays the same. 
B) Real GDP increases,but the price level stays the same. 
C) Both the price level and real GDP increase. 
D) The price level decreases,but real GDP increases. 
A) The price level increases,but real GDP stays the same. 
B) Real GDP increases,but the price level stays the same. 
C) Both the price level and real GDP increase. 
D) The price level decreases,but real GDP increases.

Question 11

One In The News article is titled "The Misery Index." If the inflation rate is 5 percent and the unemployment rate is 7 percent,the misery index is

Accepted Answer

A) 35 percent. 
B) 1.4 percent. 
C) 12 percent. 
D) 2 percent. 
A) 35 percent. 
B) 1.4 percent. 
C) 12 percent. 
D) 2 percent.

Question 12

The tax elasticity of supply is

Accepted Answer

A) Always equal to 1. 
B) Always less than 1. 
C) The percentage change in quantity supplied divided by the percentage change in tax rates. 
D) The percentage change in quantity supplied multiplied by the percentage change in tax rates. 
A) Always equal to 1. 
B) Always less than 1. 
C) The percentage change in quantity supplied divided by the percentage change in tax rates. 
D) The percentage change in quantity supplied multiplied by the percentage change in tax rates.

Question 13

If a tax cut of 3 percent causes the output supplied to increase by 6 percent,the absolute value of the tax elasticity of supply is

Accepted Answer

A) 0.5. 
B) 2.0. 
C) 6.0. 
D) 18.0. 
A) 0.5. 
B) 2.0. 
C) 6.0. 
D) 18.0.

Question 14

If the misery index is 12 and the inflation rate is 4 percent,we can conclude

Accepted Answer

A) The inflation rate will quickly rise by 8 percent. 
B) The unemployment rate must be 8 percent. 
C) The AD curve must be shifting to the right. 
D) Monetary policy is not succeeding at keeping inflation low. 
A) The inflation rate will quickly rise by 8 percent. 
B) The unemployment rate must be 8 percent. 
C) The AD curve must be shifting to the right. 
D) Monetary policy is not succeeding at keeping inflation low.

Question 15

Which of the following characterizes stagflation?

Accepted Answer

A) An increase in both unemployment and inflation. 
B) An increase in unemployment but a decrease in inflation. 
C) A decrease in both unemployment and inflation. 
D) A decrease in unemployment but an increase in inflation. 
A) An increase in both unemployment and inflation. 
B) An increase in unemployment but a decrease in inflation. 
C) A decrease in both unemployment and inflation. 
D) A decrease in unemployment but an increase in inflation.

Question 16

What is the premise behind supply-side economics,and what are the economic outcomes?

Accepted Answer

Supply-side economics focuses on increas

Question 17

Supply-side economists try to increase the AS curve with all of the following policies except

Accepted Answer

A) Tax incentives for saving,investment,and work. 
B) Deregulation. 
C) Decreasing the supply of money. 
D) Infrastructure development. 
A) Tax incentives for saving,investment,and work. 
B) Deregulation. 
C) Decreasing the supply of money. 
D) Infrastructure development.

Question 18

Investment in human capital

Accepted Answer

A) Shifts the aggregate supply curve to the left. 
B) Increases structural unemployment. 
C) Increases labor productivity. 
D) Shifts the Phillips curve to the right. 
A) Shifts the aggregate supply curve to the left. 
B) Increases structural unemployment. 
C) Increases labor productivity. 
D) Shifts the Phillips curve to the right.

Question 19

Which of the following policies is a positive supply-side lever?

Accepted Answer

A) Cutting the discount rate. 
B) Increased government transfers. 
C) Infrastructure development. 
D) Increased government regulation of industry. 
A) Cutting the discount rate. 
B) Increased government transfers. 
C) Infrastructure development. 
D) Increased government regulation of industry.

Question 20

Refer to Figure 16.3.A shift from AS3 to AS2 could be caused by

Accepted Answer

A) A decrease in government spending. 
B) A decrease in the money supply. 
C) An increase in the marginal tax rate. 
D) An increase in the investment in human capital. 
A) A decrease in government spending. 
B) A decrease in the money supply. 
C) An increase in the marginal tax rate. 
D) An increase in the investment in human capital.

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

According to supply-side economists,government regulation of factor markets,such as OSHA,

According to supply-side theory,which of the following would cause a rightward shift in the aggregate supply curve?

Structural unemployment is unemployment caused by

The Phillips curve illustrates the

According to supply-side theorists,a decrease in marginal tax rates will provide the incentive to

A movement up the Phillips curve will cause

Which of the following causes stagflation?

The closer the economy is to capacity,the greater the risk that fiscal or monetary stimulus will cause

Which of the following would be most likely to result in stagflation?

According to the consensus view,when demand increases near full employment,

One In The News article is titled "The Misery Index." If the inflation rate is 5 percent and the unemployment rate is 7 percent,the misery index is

The tax elasticity of supply is

If a tax cut of 3 percent causes the output supplied to increase by 6 percent,the absolute value of the tax elasticity of supply is

If the misery index is 12 and the inflation rate is 4 percent,we can conclude

Which of the following characterizes stagflation?

What is the premise behind supply-side economics,and what are the economic outcomes?

Supply-side economists try to increase the AS curve with all of the following policies except

Investment in human capital

Which of the following policies is a positive supply-side lever?

Refer to Figure 16.3.A shift from AS3 to AS2 could be caused by

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

Refer to Figure 16.3.A shift from AS₃ to AS₂ could be caused by