Supply-side theorists focus on incentives, and specifically the incentive of gre
ID: 1211365 • Letter: S
Question
Supply-side theorists focus on incentives, and specifically the incentive of greater disposable income. It follows that a tax cut will cause a rise in the tax base, and therefore tax revenue will...
tax revenue = tax base x tax rate
a tax cut will end up raising more tax revenue
a tax cut of 10% will cause tax revenue to fall by less than 10%.
a tax cut of 10% will cause tax revenue to fall by 10%
a tax cut of 10% will cause tax revenue to fall by more than 10%
Of the following events, which one will NOT impact aggregate demand? (Assume all else remaining constant).
a shift in consumer confidence
an increase in the money supply
tax cuts
higher input prices
greater government spending
Because households do almost 3/4 of all the spending in the American economy, the ____________ of consumers in the future is a reliable predictor of economic trends like spending and output.
The prevailing Classical theory of the 1930's assumed that.... [choose 2]
the macroeconomy has a natural tendency for full employment
the macroeconomy can find equilibrium at a level of output inconsistent with full employment.
the macroeconomy eventually (in the long-run) will feature prices that adjust to surpluses and shortages.
prices are often "sticky" and adjust little, especially over s short period of time
a tax cut will end up raising more tax revenue
a tax cut of 10% will cause tax revenue to fall by less than 10%.
a tax cut of 10% will cause tax revenue to fall by 10%
a tax cut of 10% will cause tax revenue to fall by more than 10%
Explanation / Answer
Higher input prices will not impact aggregate demand while all others do.
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