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5 Written questions

5 Matching questions

  1. Comparative Advantage
  2. Average Tax Rate
  3. Excess Reserves
  4. Anticipated Inflation
  5. Substitution Bias
  1. a When consumers adjust their purchase habits because of changing prices (consumers by products whose prices are increasing less)
  2. b The ability to produce something at a lower opportunity cost than other producers face
  3. c any reserves held beyond the required amount. No interest earned on these reserves
  4. d when the rate of inflation turns out to be roughly what most people had expected
  5. e total tax paid divided by total (taxable) income, as a percentage

5 Multiple choice questions

  1. Adam Smith's term for the natural self-regulation of a market economy driven by self-interest and efficiency
  2. a tax for which the percentage of income paid in taxes increases as income increases
  3. benefits such as sick-leave pay, vacation pay, pension plans, and health plans that represent additional compensation to employees beyond base wages
  4. A legal entity whose liability is limited to the value of their stock
  5. The incorrect assumption that one event causes another because the two events tend to occur together.

5 True/False questions

  1. Regressive Taxa tax for which the percentage of income paid in taxes increases as income increases


  2. Law of increasing costsTo produce each additional increment of a good, a successively larger increment of an alternative good must be sacrificed if the economy's resources are already being used efficiently


  3. New Goods Biassame good produced w/ better quality get more value for the same price


  4. Contractionary Fiscal PolicyAn increase in government purchases, decrease in net taxes, or some combination of the two aimed at increasing aggregate demand enough to return the economy to its output, thereby reducing unemployment


  5. Wealth of NationsThis is the 18th century book written by Scottish economist Adam Smith in which he spells out the first modern account of free market economies.


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