The supporters of a proposal to increase marginal taxes on those earning over $200,000 a year say this change would generate $100 billion in new tax revenues. A supply-side economist would argue that the actual revenue raised will be A) exactly $100 billion because there are no offsetting factors to a tax increase. B) more […]
Refer to the table above. Which of the following statements is true? A) There is a surplus of 10 notebooks in the market when the price of one notebook is $8. B) There is a shortage of 4 notebooks in the market when the price of one notebook is $6. C) There is a shortage […]
The Keynesian portion of the short-run aggregate supply (SRAS) curve implies A) a downward slope. B) no price level changes. C) flexible prices and wages. D) an upward slope. ANSWER B
Which of the following statements about the budget deficit is TRUE? A) It is equal to the public debt. B) It is a stock variable. C) It is a flow variable. D) none of the above ANSWER C
Explain Paul Romer’s ideas concerning economic growth. What will be an ideal response? ANSWER Romer argues that knowledge is a factor of production just as capital and labor are. Economies must invest in education as they do in capital. Past investments in capital make it profitable to acquire more knowledge, implying that investment leads […]
According to Romer and other new growth theorists, what could poor countries do to stimulate greater economic growth? What will be an ideal response? ANSWER According to new growth theory, poor countries can stimulate greater economic growth by investing more in human capital as well as physical capital, by moving toward freer trade, and […]
Which of the following statements is true about data? A) Empiricism does not necessarily involve data. B) Consistency of models can be checked using data. C) Convincing data analysis in economics relies on using a small sample. D) Facts that describe the world are not considered data. ANSWER B
If an individual borrows $100 at an annual rate of interest of 5%, how much interest will he have to pay at the end of a year? A) $20 B) $10 C) $50 D) $5 ANSWER D
The relationship between planned real consumption expenditures of households and their current level of real disposable income is A) the consumption function. B) saving. C) dissaving. D) investment. ANSWER A
Consider two economies: A and B that are completely similar, except their savings rate. The savings rate in economy A is greater than the savings rate in economy B. Which of the following statements is true? A) Capital accumulation will be faster in economy B in comparison to economy A. B) Capital accumulation will be […]
