quiz 11ma - policies would not work? a. Raise income taxes...

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Quiz 11 (28) 1. An increase in the income tax rate: a. produces a parallel shift in the consumption function b. steepens the slope of the consumption function c. flattens the slope of the consumption function d. makes the consumption function horizontal 2. A reduction in the income tax rate: a. Increases the multiplier for investment spending b. Reduces the multiplier for investment spending c. Increase the multiplier for government spending, but leaves unchanged the multiplier for fixed taxes d. Reduces the multiplier for government spending and leaves all other multipliers unchanged 3. The multiplier for a change in fixed taxes: a. Is larger than the multiplier for government spending b. Is smaller than the multiplier for government spending c. Is irrelevant since most taxes are variable, not fixed d. Operates so that GDP moves in the same direction as the tax change 4. If the President is trying to stimulate GDP, which of the following
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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.

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