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Unformatted text preview: policies would not work? a. Raise income taxes b. Raise government spending c. Raise transfer payments d. Raise government spending and taxes together 5. Which event makes it more likely that counter-cyclical fiscal policy can be successful: a. Forecasts of GDP seem to be less accurate than formerly b. Economists disagree about the size of the multiplier c. The Congress believes that the governments first priority is to reduce the budget deficit d. New economic research shows that changes in aggregate demand affect inflation less than once thought 6. Which argument would a supply-side tax cutter not make? a. People save and invest most of their tax cut b. The income tax is so high it discourages effort c. The effect of a tax cut on aggregate demand is large d. Capital gains taxes discourage investment...
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This note was uploaded on 09/09/2008 for the course ECON 202 taught by Professor Fernandez during the Fall '08 term at University of Louisville.
- Fall '08