27. Govemment spending classified as public investmentA) initially has a positive effect on economic growth, but tums negative at higherlevelsB) has an increasing positive effect on economic growthC) has a positive but diminishing effect on cconomic growthD) has a positive and increasing positive effect on economic growth28. Increasing government spending on transfer payments has aA) A negative but decreasing effect on economic growthB) the same negative effect as spending increasesC)a positive and decreasing effect on economic growthD) a negative and increasing effect on economic growth29. "T*" on the Laffer curve is the Scully point, the optimal tax rate that maximizeseconomic growth.A) TrueB) False30. "T*" on the Laffer curve, the optimal maximum tax rate, varies from country to country.A) TrueB) False31. Individuals paying the maximum income tax are the most sensitive to changes in taxrates.A) TrueB) False32. The tax rate associated with the Scully point on the Laffer Curve is the tax rate thatyields the maximum economic growth.A) TrueB) False33. One problem with the idea that government must intervene to correct an extemality isthatA)It is impossible to accurately calculate most externalitiesan externality is a hypothetical notion with no practical applicationB)C)the private sector can correct externalities without government helpD) by solving the original externality, the government creates a new oneE) A and D

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27. Govermment spending classified as public investment A) initially has a positive effect on economic growth, but tums negative at higher levels B) has an increasing positive effect on economic growth C) has a positive but diminishing effect on cconomic growth D) has a positive and increasing positive effect on economic growth 28

27. Govermment spending classified as public investment A) initially has a positive effect on economic growth, but tums negative at higher levels B) has an increasing positive effect on economic growth C) has a positive but diminishing effect on cconomic growth D) has a positive and increasing positive effect on economic growth 28

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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