The obama administration in 2013 let a tax holiday

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Chapter 27 / Exercise 5
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54.The Obama administration in 2013 let a tax holiday expire which effectively increases income taxes for all workers who pay into social security. The effect of this increase in taxes, all else constant, would shift the consumption function down, the aggregate expenditure curve down, and the short-run aggregate supply curve to the left.A) TrueB) FalseCorrect Answer(s):False
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55.Given that the working age population is shrinking in Japan, our discussion about the determinants of the potential growth rate of the economy suggests that this demographic reality would lower the potential growth rate of the economy for Japan, all else constant.
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Chapter 27 / Exercise 5
Exploring Economics
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56.One reason the short-run aggregate supply curve slopes upward is due to the 'stickiness' of input prices relative to output prices. We saw this in the plastering example when we let output prices rise and kept nominal wages constant. This being the case, the firm's profit maximizing output rises with the rise in prices, all else constant.
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57.According to our discussion about the cyclicality of the aggregate supply curve, the closer the economy is to potential output, the more Keynesian the world and thus, the more effective aggregate demand side policies are in terms of effecting real GDP.
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58.If output prices rise without the nominal wage rising, then real wages rise and workers are willing to work more. This is one of the main reasons that the short-run aggregate supply curve slopes upward.A) TrueB) FalseCorrect Answer(s):False
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59.When we discussed the stagflation of the 1970s, we argued that policymakers should have acted more aggressively with expansionary policies the fight the recession that occurred during that time.
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60.The more flexible wages and prices, the steeper the short-run aggregate supply curve. In fact, if prices and wages (and other inputs costs) are perfectly flexible then we are in a 'classical' world, where the short-run aggregate supply curve is vertical.
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