Differentiate between the following economic terms: 1) The short-run aggregate supply curve and long-run aggregate supply curve 2) Total product and marginal product 3) Expansionary fiscal policy and contractionary fiscal policy 4) Individual supply of labour curve and market supply of labour curve
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Differentiate between the following economic terms:
1) The short-run
2) Total product and marginal product
3) Expansionary fiscal policy and contractionary fiscal policy
4) Individual supply of labour curve and market supply of labour curve
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- Question 21 An increase in real per capita GDP in an economy would __________ the average standard of living and would _________ life expectancy. raise; have little effect on raise; shorten raise; increase have no effect on; increase lower; shorten Question 22 An increase in _________ would lead to an increase in long-run economic growth. consumer spending and borrowing government taxes and fees resources and technology imports and exports prices and interest rates Question 23 Which of the following are the three major categories of resources? physical capital, technology, institutions land, labor, technology institutions, human capital, land natural resources, physical capital, human capital labor, physical capital, technologyFor each of the following fiscal policy proposals, determine whether the primary focus is on aggregate demand or aggregate supply or both: i. $1,000 per person tax reduction ii. a 5% reduction in all tax rates iii. Pell Grants, which are government subsidies for college education iv. government-sponsored prizes for new scientific discoveries v. an increase in unemployment compensation (i) both; (ii) supply-side; (iii) supply-side; (iv) both; (v) demand-side (i) demand-side; (ii) both; (iii) supply-side; (iv) supply-side; (v) both (i) demand-side; (ii) both; (iii) both; (iv) supply-side; (v) demand-side (i) supply-side; (ii) demand-side; (iii) demand-side; (iv) both; (v) both (i) supply-side; (ii) supply-side; (iii) demand-side; (iv) both; (v) bothINTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Supply Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Demand Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending to Shift the appropriate curve on the graph to reflect this change. The implementation of the new tax credit causes the interest rate to Supply Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government implements a new investment tax credit. This change in spending causes the government to run a budget Shift the…
- INTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply ? Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending to Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit. Shift the appropriate curve on the graph to reflect this change. The repeal of the previously existing tax credit causes the interest rate to investment to Scenario 3: Initially, the…QUESTION 1 The rational for cutting payroll tax during economic downturn is stated correctly by which of the following?. Payroll tax is a lump-sum tax. Reduction of it lowers the non-wage income and encourages workers to work more. Payroll tax is a lump-sum tax. Reduction of it raises the non-wage income and encourages workers to work more. Payroll tax is a flat rate labor income tax. Reduction of it raises the after tax wage rate and encourages workers to work more Payroll tax is a flat rate labor income tax. Reduction of it lowers the after tax wage rate and encourages workers to work mon QUESTION 2 Which of the following taxes are labor income taxes or have a component that is labor income tax? (1) payroll tax. (II) individual income tax. (III) corporate income tax. (V) sales tax. (V) property tax. (VI) excise and customs. (IV), (V), and (VI). (1) and (II). (II) and (III). (II), (III), and (V). AUFANIANThe supply-side effects show that a tax cut on labor income ________ the supply of labor and ________ employment. decreases; increases increases; increases increases; does not change increases; decreases decreases; decreases The supply-side effects of an income tax cut ________ potential GDP and ________ aggregate supply. increase; decrease decrease; decrease decrease; increase increases; do not change increase; increase Which of the following is a monetary policy goal? i. keeping the inflation rate low ii. attaining maximum employment iii. keeping the long-term interest rate at a moderate level ii only i, ii, and iii i only iii only i and iii When real GDP is greater than potential GDP, there is ________ which leads the inflation rate to ________. Group of answer choices an inflationary gap; fall a recessionary gap; rise a recessionary gap; fall a recessionary gap; remain stable an inflationary gap; rise Which…
- INTEREST RATE (Percent) Supply LOANABLE FUNDS (Billions of dollars) Demand Demand Supply (?) Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 18%. Now suppose there is an increase in the tax rate on interest income, from 18% to 22%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to ▼ and the level of investment spending to Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital within some relevant time period. Suppose the government implements a new investment tax credit. Shift the appropriate curve on the graph to reflect this change. The implementation of the new tax credit causes the interest rate to and the level of saving to I Scenario 3: Initially, the…Aggregate Supply and Aggregate Demand show the relationship between economic output (GDP) and price levels in the macro-economy at a given point in time. Define the terms ‘Aggregate Demand’ and ‘Aggregate Supply.’ State TWO (2) monetary and TWO (2) fiscal policies that government can adopt, to effect change in Aggregate Demand.This course is designed to provide an understanding of market economies and the fluctuations they are subject to. With this in mind, please answer the questions that follow. a) Assume the economy is in a recession. Discuss how the government could implement fiscal policy to deal with the recession and the steps by which fiscal policy moves the economy out of the recession b) Why is the shape of the aggregate supply curve important in understanding the impact of monetary and fiscal policy?
- This course is designed to provide an understanding of market economies and the fluctuations they are subject to. With this in mind, please answer the questions that follow. a) Assume the economy is in a recession. Discuss how the government could implement fiscal policy to deal with the recession and the steps by which fiscal policy moves the economy out of the recession (Explain fully). b) Explain how expansionary fiscal policy in the U.S. would affect the economies of other countries.Which of the following is a category of fiscal policy?A) government policies regarding transfer payments and welfare benefitsB) government policies regarding the purchase of goods and servicesC) government policies regarding taxationD) all of the above Planned aggregate expenditure increases when ________ in the income-expenditure model.A) the government sector is excludedB) consumption is excludedC) the government sector is includedD) investment is excluded If output is greater than planned aggregate expenditure, there will beA) no change in inventories.B) a planned increase in inventories.C) an unplanned decrease in inventories.D) an unplanned increase in inventories. . During a recession, unemployment ________, tax revenue ________, and the budget deficit ________.A) rises; rises; fallsB) falls; falls; risesC) rises; falls; risesD) falls; rises; risesThis week's City Council Scenario: The Federal Government is developing a plan to help the nation's economy. There are some calling for Expansionary Fiscal Policies while others are in favor of Expansionary Monetary Policies. Prepare a response to help the townspeople understand the plans being presented at the Federal Level. Contrast Expansionary Fiscal policies and Expansionary Monetary policies. Explain the effect of Fiscal and Monetary policies on the economy. Discuss the drawbacks of not using any policies to help the economy.