139) A study by Edward Prescott found that the ________ marginal tax rates in the United Statesrelative to Europe resulted in a ________ quantity of labor supplied in the United States.A) lower; smallerB) higher; smallerC) lower; largerD) higher; larger139)Answer: CDiff: 2Page Ref: 935/561Topic: Tax PolicyLearning Outcome: Macro 9: Discuss fundamental approaches to fiscal policyAACSB: Reflective Thinking42
140) Critics of spending on infrastructure as a means to stimulate the economy, such as Alan Viard ofthe American Enterprise Institute, note that, dollar for dollar, tax cuts and direct governmentpayments ________ infrastructure spending, ________.140)Diff: 2Page Ref: 936-937/562-563Topic: Tax PolicyLearning Outcome: Macro 7: Use the aggregate supply-aggregate demand model to explain aggregatefluctuations in output and inflationAACSB: Reflective ThinkingTRUE/FALSE. WriteʹTʹif the statement is true andʹFʹif the statement is false.141) Raising taxes on interest and dividend income will increase the level of investment and economicgrowth.141)Answer:TrueFalseDiff: 2Page Ref: 933/559Topic: Tax PolicyLearning Outcome: Macro 9: Discuss fundamental approaches to fiscal policyAACSB: Reflective Thinking142) The level of crowding out associated with a tax cut will be larger if the tax change has asupply-side effect than it will be if it only has a demand-side effect.142)Diff: 3Page Ref: 934-935/560-561Topic: Supply-Side PolicyLearning Outcome: Macro 9: Discuss fundamental approaches to fiscal policyAACSB: Analytic Skills143) The double taxation problem occurs because households pay taxes on dividends and capital gainsfrom stock and they pay taxes on income.143)Diff: 1Page Ref: 933/559Topic: Tax PolicyLearning Outcome: Macro 1: Define macroeconomics and identify its basic concernsAACSB: Reflective Thinking43
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