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Supply Side Macroeconomics

1. Supply side economists argue:

A) Tax rates can be brought down and tax revenues will increase, and lower
taxes will lead to more supply, lower inflation, and more GDP
B) Tax rates can be brought down but the Laffer curve shows revenues will always fall
C) Higher taxes will lead to more supply, lower inflation, and more GDP while the Laffer curve shows more revenue will also result
D) Stagflation proves the Phillip's curve does exist
E) That monetary policy is the only way to expand the economy

2. If the Federal Government is spending more than it receives in tax revenues in an effort to reduce unemployment then we have a:

A) structural surplus
B) structural deficit
C) passive surplus
D) passive deficit
E) it depends on the trade balance

3. Which of the following should strengthen the U.S. dollar relative to other currencies?

A) an increase in incomes in the U.S. relative to those in other countries
B) a reduction in inflation in the U.S. relative to that in other countries
C) a reduction in interest rates in the U.S. relative to that in other countries
D) a return to the gold standard
E) a sustained federal government budget surplus

Solution Preview

Supply side economists argue:

A) Tax rates can be brought down and tax revenues will increase, and lower
taxes will lead to more supply, lower inflation, and more GDP
B) Tax rates can be brought down but the Laffer curve shows revenues will always fall
C) Higher taxes will lead to more supply, lower inflation, and more GDP while the Laffer curve shows more revenue will also result
D) Stagflation proves the Phillip's curve does exist
E) That monetary policy is the only way to expand the economy

A) Tax rates can be brought down and tax revenues will increase, and lower
taxes will lead to more supply, lower inflation, and more GDP

This is because as per supply-side economics developed during ...

Solution Summary

This discusses the concepts related to the Supply Side Macroeconomics like passive deficit, inflation and taxes

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