Supply-side personal income tax cuts are expected to work by increasing work incentives. Which of the following explains why such tax cuts might not have the expected effect? O A. Workers may use their increased real income to purchase more leisure, and thus labor supply I will not increase. - B. Since there are rational expectations, it will be expected that tax cuts are only temporary. C. Workers do not respond to change in tax rates since they have to work anyway. D. Firms will invest more and replace workers with capital when there are income tax cuts. E. Firms will be able to reduce wages when income tax rates fall, since real wages are now higher.

Supply-side personal income tax cuts are expected to work by increasing work incentives. Which of the following explains why such tax cuts might not have the expected effect? O A. Workers may use their increased real income to purchase more leisure, and thus labor supply I will not increase. - B. Since there are rational expectations, it will be expected that tax cuts are only temporary. C. Workers do not respond to change in tax rates since they have to work anyway. D. Firms will invest more and replace workers with capital when there are income tax cuts. E. Firms will be able to reduce wages when income tax rates fall, since real wages are now higher.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the inflation rate is 3 percent and the nominal interest rate is 8 percent, how much is the after-tax real interest rate if the government imposes a 20 percent interest income tax? O a. 3.4 percent O b. 4 percent O c. None of the above O d. 5.4 percent.
Suppose the economy is operating at potential GDP. Then the federal government decides to implement a large tax cut. Which curve shifts and in which direction? O aggregate demand shifts left aggregate supply shifts right. aggregate supply shifts left. aggregate demand shifts right
1st attempt Assume that people in the economy have adaptive expectations. If the inflation rate has been stable at 2% in each prior year (because of passive monetary policies) and the central bank wants to lower unemployment, which policy should it implement? Choose one: O A. a policy that makes the inflation rate less than 2% O B. a policy that makes the inflation rate equal to 2% O C. a policy that makes the inflation rate greater than 2%
6.
Darshan needs to borrow money to become a nurse practitioner. Suppose that compensation of nurse practitioners is expected to increase. Assuming nothing else changes, this means that if Darshan borrows now, his cost of borrowing money is expected to due to the following factor: O Decreasing preferences for future consumption. O Rising benefits of becoming a nurse practitioner. Rising compensation of nurse practitioners provokes inflation. Which of the following events could decrease the cost of money? Check all that apply. The Federal Reserve purchases Treasury securities held by banks Inflation increases The federal deficit decreases The Federal Reserve sells Treasury securities to banks decrease increase
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QUESTION 36 What determines tax revenues? O a. The level of national income. O b. The income tax rate. O c. The money supply in the economy. O d. Both (a) and (b).
Please help with this practice question
Suppose the economy is such that the current GDP is great than potential GDP. If the government does not act, which of the following would we expect to occur? Select one or more: O a. Price levels will decrease Ob. GDP will increase O c. Price levels will increase O d. No effect of GDP e. GDP will decrease O f. No effect on price levels
Please state A,B,C or D from the photo