True/False 11) The term ‘voodoo economics’ is a term used by the proponents of supply side economics trying to explain to its critics that lower tax rates will result in higher tax revenue.12) Barro is considered to be a supply side economist which is consistent with his idea that we should eliminate the corporate income tax.13) According to the table depicting the effective tax rate on capital for 2007, the only country that has a higher effective tax rate on capital is Greece.14) According to our discussion of supply side economics, there are positive aggregate demand side effects and positive supply side effects, similar to what happened during the new economy.15) We argued that the tax multiplier is higher in absolute value than the government spending multiplier.16) The more the Fed accommodates shocks to money demand, the larger the (government) spending multiplier.17) According to the Congressional Budget Office (CBO), the stimulus package worked in termsof creating jobs, lowering unemployment, and raising GDP.18) Spending by local governments to stimulate or slow down their local economies is an example of fiscal policy.19) When talking about tax multipliers using tax rates instead of the more simple lump sum taxes, we argued that the social security tax cut resulted in a higher tax multiplier.20) When we add the marginal propensity to import to our model, the spending multiplier falls. In fact, the higher the marginal propensity to import, the smaller the spending multiplier, all else constant.

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Chapter1: Making Economics Decisions
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True/False

11) The term ‘voodoo economics’ is a term used by the proponents of supply side economics trying to explain to its critics that lower tax rates will result in higher tax revenue.
12) Barro is considered to be a supply side economist which is consistent with his idea that we should eliminate the corporate income tax.
13) According to the table depicting the effective tax rate on capital for 2007, the only country that has a higher effective tax rate on capital is Greece.
14) According to our discussion of supply side economics, there are positive aggregate demand side effects and positive supply side effects, similar to what happened during the new economy.
15) We argued that the tax multiplier is higher in absolute value than the government spending multiplier.
16) The more the Fed accommodates shocks to money demand, the larger the (government) spending multiplier.
17) According to the Congressional Budget Office (CBO), the stimulus package worked in terms
of creating jobs, lowering unemployment, and raising GDP.
18) Spending by local governments to stimulate or slow down their local economies is an example of fiscal policy.
19) When talking about tax multipliers using tax rates instead of the more simple lump sum taxes, we argued that the social security tax cut resulted in a higher tax multiplier.
20) When we add the marginal propensity to import to our model, the spending multiplier falls. In fact, the higher the marginal propensity to import, the smaller the spending multiplier, all else constant.

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