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5 Written Questions

5 Matching Questions

  1. Contractionary Monetary Policy
  2. The Laffer Curve
  3. Unlimited Liability
  4. Philip's Curve
  5. Diminishing Marginal Returns
  1. a Graph showing an inverse (negative) relationship between the unemployment rate and the inflation rate
  2. b An increase in the discount rate and federal funds rate which discourages banks from borrowing; An open market sale by the FED
  3. c The owner is personally and fully responsible for all losses and debts of the business
  4. d a level of production in which the marginal product of labor decreases as the number of workers increases
  5. e A graph showing total tax revenue as a function of the tax rate. Used by "supply-side" economists to support arguments for a tax cut or increase

5 Multiple Choice Questions

  1. a tax for which the percentage of income paid in taxes increases as income increases
  2. shares of ownership in a company
  3. when the rate of inflation turns out to be roughly what most people had expected
  4. The assumption that people act in a rational way and they want more at cheaper prices and less at higher. To act rationally is to act one way, to think rationally is to think logically. The assumption that humans make the best use of their resources
  5. the portion of a business's profits not distributed to stockholders

5 True/False Questions

  1. Discount RateItems designated by government decree to serve as money, although essentially worthless


  2. Automatic StabilizersChanges in tax revenue or government spending that occur automatically as the economy grows or contracts which reduce the size of the growth or contraction; reduce the magnitude of swings in the business cycle


  3. Capitalisman economic system based on private ownership of capital


  4. DisinflationA contraction of a nation's output accompanied by an inflation in the price level


  5. Fallacy of False CauseThe interest a bank pays another bank for an overnight loan


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