ECONOMICS 1120189 - 264 A B C D

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264) The tax wedge is the difference between the A) amount of taxes needed to balance the federal budget and the actual amount of taxes.B) amount of taxes needed to pay off the national debt and the actual amount of taxes.C) nominal and real interest rates.D) pretax and posttax returns to an economic activity.264)Answer: D Page Ref: 968/586 Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy. 265) A decrease in which of the following would decrease the tax wedge? 265) Page Ref: 968/586 Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy. 266) Economists who believe the supply-side effects of tax cuts are small essentially believe that Page Ref: 970 - 971/588 - 589 Learning Outcome: Macro - 1: Define macroeconomics and identify its basic concerns. 267) Compare the effect on the price level and real GDP of a decrease in tax rates assuming asupply-side effect versus no supply-side effect. Compared to no supply-side effect, including asupply-side effect for the decrease in tax rates will cause the price level to increase ________ andreal GDP to increase ________. Page Ref: 970 - 971/588 - 589 Learning Outcome: Macro - 1: Define macroeconomics and identify its basic concerns. 268) Fiscal policy actions that are intended to have long-run effects on real GDP attempt to increase________ through changing ________. A) aggregate demand; government spendingB) aggregate supply; government spendingC) aggregate demand; taxesD) aggregate supply; taxesAnswer: D 268) Page Ref: 968/586 Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy. 66
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