Log in
Economics
1
answer
0
watching
125
views

Which of the following best describes supply-side economics?
Ā 
A. Tax increases encourage borrowing from Banks, which leads to greater purchasing power.
B. Tax cuts give more money to investors and consumers, which leads to overall economic growth.
C. The government establishes production goals for businesses, which leads to higher price goods.
D. The government increases revenue to offset federal and state spending, which leads to a balanced budget.

Watch
1
answer
0
watching
125
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Alice Sejake
Alice SejakeLv10
10 Oct 2020

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

5 Multiple choice questions... please answer all of them.

15. The accumulation of years of spending more money than is collected in revenues over several years creates a budget (5 points)
debt
deficit
surplus
reversal
16. How does the U.S. government promote economic growth? (5 points)
By decreasing taxes and decreasing spending
By decreasing taxes and increasing spending
By increasing taxes and decreasing spending
By increasing taxes and increasing spending
17. The country of Lilliput has low unemployment and high consumer spending, and small businesses are thriving. However, prices are starting to rise throughout the economy. What should Lilliput's government do to prevent inflation from happening? (5 points)
Lower the income tax, which gives citizens less money to spend, and buy services from civilian-owned businesses, which creates more jobs.
Lower the income tax, which gives citizens more money to spend, and buy more services from civilian-owned businesses, which creates more jobs.
Raise the income tax, which gives citizens less money to spend, and stop buying services from civilian-owned businesses, which eliminates jobs.
Raise the income tax, which gives citizens less money to spend, and buy more services from civilian-owned businesses, which creates more jobs.
18. The government increases taxes. What might be a reason for this change in fiscal policy? (5 points)
A deficit due to improving nationwide public transportation
A deficit due to more monies flowing in from investors
A surplus due to greater amounts of income from exports
A surplus due to more government spending on building roads
19. Which of these is required to balance the budget for the year? (5 points)
Revenue equal to spending
Revenue greater than spending
Revenue less than spending
No national debt

1. The primary tool used by supply-side economists to eliminate macroeconomic problems is

A. the discount rate.

B. corporate tax rates.

C. government spending.

D. open market operations.

E. the reserve requirement.

2. When the Federal Reserve System buys government securities on the open market,

A. the money supply will decrease.

B. excess reserves at commercial banks will decrease.

C. excess reserves at commercial banks will increase.

D. interest rates will increase

3. One of the advantages of automatic stabilizers over discretionary fiscal policy is that automatic stabilizers

A. has a greater multiplier effect than discretionary policy.

B. is not subject to the time lag problems of discretionary policy.

C. does not produce a deficit during recessions as a discretionary policy does.

D. makes the actual budget a better reflection of the condition of the economy than the full-employment budget.

4. "I have promised to do everything in my power to reduce the federal deficit. That means reducing federal expenditures and, if necessary, increasing taxes. Under present conditions of full employment and steady prices, we can afford to bear the burden of this debt (i.e., pay off the debt) now instead of passing it on to our children and grandchildren."

If the policies of the Senator quoted above were adopted, what effects would be expected while these policies were being implemented?

A. higher inflation

B. increases imports

C. higher rates of economic growth

D. increased unemployment and idle capacity

5. An inflationary gap can be reduced or completely closed by

A. decreasing taxes while leaving government spending on goods and services unchanged.

B. decreasing government spending on goods and services while leaving taxes unchanged.

C. increasing government spending on goods and services while leaving taxes unchanged.

D. increasing both government spending on goods and services and taxes by the same amount.

6. Compared to fiscal policy, an advantage of monetary policy is its

A. greater flexibility.

B. highly selective impact on segments of the economy.

C. ability to eliminate cost-push inflation.

D. need for approval by Congress.

E. need for approval by the President.

7. An increase in government spending on goods and services which causes a budget deficit to exist

A. is always inflationary.

B. is more inflationary than equal increases in private spending.

C. is usually not inflationary when the economy is operating at its full-employment level of output.

D. will not necessarily cause serious inflation as long as there are unemployed resources in the economy.

8. Some analysts believe the tax cuts enacted during the President H.W. Bush administration represented a supply-side economic policy rather than a Keynesian fiscal policy because

A. the tax cuts were accompanied by decreases in interest rates.

B. the tax cuts were accompanied by increases in government spending.

C. the tax cuts were primarily aimed at upper-income groups and businesses.

D. the tax cuts were primarily aimed at middle income and lower-income groups.

9. When the federal government is stabilizing the economy by increasing taxes, monetary authorities should

A. take actions to decrease interest rates.

B. increase the supply of money.

C. buy government securities in the open market.

D. follow an expansionary money policy.

E. follow a contractionary money policy.

10. Suppose a commercial bank has demand deposits (checking accounts) of $400,000, actual reserves of $170,000, and a reserve requirement of 20%. This single commercial bank can lend a maximum of ______ and the banking system can increase loans by a maximum of ______

A. $90,000 and $450,000.
B. $90,000 and $360,000.
C. $90,000 and $170,000.
D. $170,000 and $450,000.

E. both can lend an unlimited amount.

11. Which of the following would most likely result if the federal government increased its spending without changing tax revenues during a period of full employment?

A. inflation

B. a recession

C. lower interest rates

D. a larger net exports deficit

12. Fiscal policy that emphasizes cutting taxes as a means of improving incentives to work, and invest would be characterized in aggregate demand - aggregate supply framework primarily a shift

A. left in the aggregate demand curve.

B. left in the aggregate supply curve.

C. right in the aggregate supply curve.

D. no shift in either the aggregate demand curve or the aggregate supply curve.

13. Which of the following will result in the greatest increase in aggregate expenditures/demand?

A. A $100 decrease in personal income taxes

B. A $100 increase in personal income taxes

C. A $100 increase in government expenditures

D. A $100 increase in government expenditures which is accompanied by a $100 increase in personal income taxes

E. Both A and C will have the same effect on aggregate expenditures

14. You are given the following information about aggregate demand for an economy: (1)consumption = $600 billion; (2) investment = $50 billion; (3) government purchases = $100 billion; and (4) net export = $20 billion. If the full-employment level of GDP for this economy is $720 billion, then what combination of actions would be most consistent to achieve full employment and stable prices?

A. an increase in government spending and taxes

B. decrease government spending and taxes

C. decrease government spending and increase taxes

D. increase government spending and decrease taxes

15. Advocates of fiscal policy agree that discretionary fiscal policy will stabilize the business cycle most when the federal government

A. continuously incurs budget deficits.

B. continuously runs budget surpluses.

C. balances its budget every year.

D. incurs budget deficits during recessions and budget surpluses during demand-pull inflations.

E. incurs budget surpluses during recessions and budget deficits during demand-pull inflations.

16. Discretionary fiscal policy that increases the government budget deficit has the same effect on equilibrium as

A. an increase in personal saving.

B. an increase in business investment.

C. a decrease in government spending.

D. a decrease in personal consumption expenditures

Q1. In the short run, an increase in the discount rate usually

a. causes the equilibrium level of real GDP and the price level to fall.

b. leads banks to hold fewer excess reserves.

c. leads to an increase in the price of existing bonds.

d. results in decreases in other interest rates.

Q2. Both Keynesians and monetarists agree that monetary policy works by shifting aggregate supply.

a. true

b. false

Q3. The effect of expansionary monetary policy is to

a. increase real output and decrease the price level.

b. decrease real output and increase the price level.

c. increase real output and increase the price level.

d. decrease real output and decrease the price level.

Q4. The price of bonds and the interest rate are

a. unrelated.

b. inversely related.

c. related, but we are not sure how.

d. positively related.

Q5. If the Fed increases the reserve requirement,

a. banks will issue more loans.

b. consumers will save more.

c. banks will issue fewer loans.

d. consumers will save less.

Q6. A central bank that engages in inflation targeting is following a monetary rule.

a. true

b. false

Q7. The Federal Reserve increased the money supply significantly during the Great Depression, but prices continued to fall anyway.

a. true

b. false

Q8. Keynesian theory argues that

a. decreases in the money supply lead to increases in the interest rate which increases investment which increases the level of real GDP.

b. increases in the money supply lead to decreases in the interest rate which increases investment which increases the level of real GDP.

c. increases in the money supply lead to decreases in the interest rate which decreases investment which decreases the level of real GDP.

d. increases in the money supply cause consumers to spend more which reduces the unemployment rate and therefore increases real GDP.

Q9. The effect of contractionary monetary policy is to

a. decrease real output and increase the price level.

b. increase real output and decrease the price level.

c. increase real output and increase the price level.

d. decrease real output and decrease the price level.

Q10. Keynesian economists believe that monetary policy works through its effect on

a. long-run aggregate supply.

b. the interest rate.

c. consumer confidence.

d. the federal budget deficit.

Q11. An expansionary monetary policy results in lower interest rates, which in turn

a. lead to higher rates of taxation.

b. cause firms to invest more.

c. lead to lower bond prices.

d. cause consumers to save more.

Q12. Contractionary monetary policy is used to combat recessions.

a. true

b. false

Q13. Economic growth can also be defined as the cumulative contribution of the rate of growth of capital, the rate of growth of labor, and the rates of growth of capital and labor productivity.

a. true

b. false

Q14. Small differences in the annual growth rate of a country add up to large differences over time because of compounding.

a. true

b. false

Q15. Economic growth occurs when

a. there is an increase in the inflation rate.

b. there is an increase in the amount of capital.

c. there is an increase in the unemployment rate.

d. the production possibilities curve becomes flatter.

Q16. Which one of the following is TRUE?

a. Small changes in the annual growth rate amount to a measurable difference in the long-term growth trend of a country.

b. For every country that experiences an increase in its growth rate, there must be another experiencing a decline.

c. A well-defined system of property rights benefits only the wealthy, and consequently it produces income inequality that will stifle economic growth.

d. Restricting imports will enhance a country's economic growth.

Q17. Economic growth is reflected in

a.

growth in total output.

b. an increase in tax revenue.

c. increases in the level of employment.

d. increase in per capita real GDP.

Q18. Economic growth is reflected in the production possibilities curve becoming flatter.

a. true

b. false

Q19. Research has shown that the growth of developing countries is most strongly enhanced by

a. providing a good secondary education.

b. increasing the money supply.

c. providing incentives to have large families.

d. providing colleges and universities.

Q20. Which of the following is the most important factor affecting economic growth?

a. the rate of interest

b. the exchange rate

c. the price level

d. the rate of saving

Q21. Secondary schooling makes measurable contributions to economic growth in developing countries.

a. true

b. false

Q22. Poorly defined property rights inhibit economic growth.

a. true

b. false

Q23. Which one of the following helps preserve incentives to develop new technologies?

a. tariffs

b. income taxes

c. patents

d. quantity restrictions on imports

Q24. Studies indicate that

a. there is no relationship between economic growth and saving.

b. there is a negative relationship between economic growth and saving.

c. there is a positive relationship between economic growth and saving.

d. saving does not contribute to capital formation.

Q25. The European Union is

a. an organization established to resolve trade disputes among member nations.

b. a group of countries that impose tariffs on one another's agricultural goods.

c. a restricted trade zone.

d. a common market.

Q26. Which one of the following is FALSE?

a. Trade of goods facilitates the exchange of intellectual property as well.

b. The end result of trade is that richer countries take advantage of poorer ones.

c. A country enjoys an absolute advantage if it can produce a good with fewer resources than any other country can.

d. Countries that engage in trade will end up specializing according to their own comparative advantage.

Q27. If there are two goods and two countries, then one country can have

a. an absolute advantage in both goods but a comparative advantage in only one good.

b. an absolute advantage in both goods and a comparative advantage in both goods.

c. an absolute advantage in neither good and a comparative advantage in both goods.

d. an absolute advantage in one good, an absolute disadvantage in the other good, and a comparative advantage in neither.

Q28. An infant industry is one in which

a. the firms are too new and too small to compete internationally.

b. no country has a comparative advantage.

c. no country has an absolute advantage.

d. the products are only consumed domestically.

Q29. The European Union is an example of a common market.

a. true

b. false

Q30. An import quota will make the supply curve for the imported good

a. unitary elastic.

b. negatively sloped.

c. perfectly elastic.

d. perfectly inelastic.

Q31. If the infant-industry argument is used to protect an industry that has already matured then

a. consumers lose because they pay a price for a product which is below the world price.

b. consumers lose because they pay a price for a product which is above the world price.

c. no one loses.

d. stockholders lose because the firm cannot compete with other firms.

Q32. Protection should be withdrawn from an infant-industry when the companies in the industry

a. reach a sufficient size to compete with foreign firms.

b. become profitable.

c. are listed on the domestic stock exchange.

d. double their sales revenues.

Q33. Which of the following is a true statement?

a. Exporters benefit from trade and importers do not.

b. Free trade harms domestic producers of goods that face import competition.

c. Consumers benefit from trade and producers do not.

d. Everyone benefits from free trade in the short run.

Q34. In the United States today, imports are over

a. 22 percent of GDP.

b. 26 percent of GDP.

c. 14 percent of GDP.

d. 18 percent of GDP.

Q35. Table 16.6

Product Country X Country Y

Gallons of Ice Cream 2,000 1,000

Yards of Textiles 6,000 2,000

Table 16.6 shows the combinations of quantities of two goods, gallons of ice cream and yards of textiles, that can be produced with all of the resources available in two countries, X and Y.

Refer to Table 16.6. Which of the following statements is TRUE?

a. Country X has a lower opportunity cost of producing ice cream than does Country Y.

b. Country Y has a comparative advantage in producing textiles.

c. Country X has a comparative advantage in producing ice cream.

d. In Country X, the opportunity cost of producing a gallon of ice cream is three yards of textiles.

Q36. Table 16.1

Alpha's Production Possibilities

A B C D E

Cookies 4 3 2 1 0

Coffee 0 5 10 15 20

Beta's Production Possibilities

A B C D E

Cookies 8 6 4 2 0

Coffee 0 6 12 18 24

Table 16.1 shows the quantities of cookies and coffee that can be produced with the full amount of resources available in each of two countries, Alpha and Beta.

Refer to Table 16.1. The table shows the production possibilities of cookies and coffee in Alpha and Beta measured in tons. In Alpha the domestic cost of 1 ton of cookies

a. is 5 tons of coffee.

b. changes with the level of coffee production.

c. changes with the level of cookie production.

d. averages 4 tons of coffee.

Q37. Table 16.1

Alpha's Production Possibilities

A B C D E

Cookies 4 3 2 1 0

Coffee 0 5 10 15 20

Beta's Production Possibilities

A B C D E

Cookies 8 6 4 2 0

Coffee 0 6 12 18 24

Table 16.1 shows the quantities of cookies and coffee that can be produced with the full amount of resources available in each of two countries, Alpha and Beta.

Refer to Table 16.1. If these two countries, Alpha and Beta, specialize based on comparative advantage

a. Beta will specialize in producing both items.

b. Alpha will specialize in cookies, and Beta will specialize in coffee production.

c. Alpha will specialize in coffee, and Beta will specialize in cookies.

d. Alpha will specialize in producing both items.

Q38. A country is made richer by its exports and poorer by its imports.

a. true

b. false

Q39. The demand for Japanese yen will increase when

a. Japan becomes more productive relative to the United States.

b. Americans change preferences in favor of domestically produced goods.

c. America is perceived as more stable politically and economically than Japan.

d. real interest rates in Japan fall.

Q40. If labor productivity improves in India relative to other countries,

a. the demand for the Indian rupee will decrease, leading to its appreciation.

b. the demand for the Indian rupee will decrease, leading to its depreciation.

c. the demand for the Indian rupee will increase, leading to its depreciation.

d. the demand for the Indian rupee will increase, leading to its appreciation.

Q41. Assume that there is an increased demand in the United States for Australian wines. If all other factors are held constant, this will result in

a. an appreciation of the Australian dollar.

b. a movement along the demand curve for Australian wine.

c. a decrease in the supply of U.S. dollars in the foreign exchange market.

d. an appreciation of the U.S. dollar.

Q42. Capital account transactions occur

a. when a U.S. citizen purchases stock in a U.S. corporation.

b. because of foreign investments.

c. when you move money from one U.S. bank to another U.S. bank.

d. when a U.S. company purchases goods from a foreign company.

Q43. When a country intervenes in foreign currency markets to maintain a fixed exchange rate

a. it is engaged in hedging.

b. it increases the foreign exchange risk faced by its citizens.

c. it does so by using its foreign exchange reserves.

d. it smoothes out fluctuations in the level of business activity.

Q44. An increase in the U.S. demand for Japanese yen causes

a. an increase in the dollar-price of yen.

b. an increase in the demand for U.S. goods.

c. an increase in the yen-price of dollars.

d. a decrease in the supply of yen.

Q45. Other factors held constant, a rise in the price level in Japan that exceeds the rise in the price level in other countries will most likely result in

a. a decrease in the supply of the Japanese yen.

b. an increase in the supply of Japanese goods.

c. a depreciation of the dollar.

d. a decline in the level of Japanese exports.

Q46. The fact that the United States has a trade deficit means that

a. U.S. workers cannot compete with workers overseas.

b. the United States has a surplus in its capital account.

c. interest rates in the United States are low compared to the world average.

d. the United States has a deficit in its capital account.

Q47. Which of the following statements is true about the role of gifts given to U.S. citizens from foreigners?

a. Gifts are only included in the balance of payments if the gift is over $1,000,000.

b. Gifts given to U.S. citizens are not included in the balance of payments, but gifts given to foreigners are included as deficit items.

c. Gifts are included in the balance of payments.

d. Gifts are not included in the balance of payments.

Q48. Every transaction concerning the exportation of American goods constitutes a

a. demand for foreign currency and a supply of dollars.

b. demand for dollars, with no effect on markets for foreign currencies.

c. supply of foreign currency, with no effect on the market for dollars.

d. supply of foreign currency and demand for dollars.

Q49. If the capital account is in surplus, the current account will be in deficit.

a. true

b. false

Q50. The balance of payments consists of the

a. capital account, official reserve transactions account, and recent account.

b. current account, official reserve transactions account, and monetary account.

c. current account, capital account, and official reserve transactions account.

d. current account, capital account, and gold flows.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in