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5 Written Questions

5 Matching Questions

  1. Higher Tax Rates
  2. Special interest effect
  3. Nominal Interest rate
  4. Lower marginal tax rate
  5. Medium of Exchange
  1. a percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principle.
  2. b -will give people the incentive to work more
    -if believed to be long term will shift both SRAS and LRAS
    -long run growth oriented strategy
  3. c an issue that generates substantial benefits for a small group by generating minimal costs to a large group.
  4. d -discourage work and productivity
    -High tax rates reduce capital formation
    -Encourage people to purchase less desired goods just because they are tax deductible
  5. e Money used to buy goods and services
    -fiat money: money that has no intrinsic value
    -More efficient to use money

5 Multiple Choice Questions

  1. -Proper timing is crucial and hard to achieve
    -Automatic stabilizers help redirect the economy
    -Fiscal policy is less potent than originally thought
  2. -changes in quantity are not sensitive to changes in price
    -curves are steeper
    -Perfect = vertical line
  3. Y= employee compensation + proprietor's income + rent + corporate profits + interest income + indirect business taxes + depreciation + net income of foreigners
  4. average number of times a dollar is used to purchase final goods and services during a year.
  5. government spending is great than government revenues

5 True/False Questions

  1. Quantity DemandedChanges in quantity are sensitive to changes in price
    -elastic curves are flatter
    -perfect = horizontal


  2. Actual Unemploymentthe sum of all three types of unemployment


  3. Employed personActively seeking employment (in last 4 weeks) or waiting to start or return to a job


  4. Lower Interest rate causes-consumption and investment to increase
    -net exports to increase
    -asset prices to increase


  5. Natural Unemploymentthe combination of Structual unemployment and frictional unemployment and is not fixed but affected by the structure of labor force and public policy


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