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Tax cuts affect only aggregate demand not aggregate supply.

A) True
B) False

Correct Answer

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There are ways that policymakers could reduce the costs of inflation without reducing inflation.

A) True
B) False

Correct Answer

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If the Fed followed a rule for monetary policy,the time inconsistency problem would be eliminated.

A) True
B) False

Correct Answer

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Advocates of stabilization policy argue that when there is a recession,the government should increase the money supply and increase government expenditures.

A) True
B) False

Correct Answer

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Once state and federal taxes are added together,a typical worker faces about a 40 percent marginal tax-rate on interest income.

A) True
B) False

Correct Answer

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verified

In effect,a consumption tax would put all saving automatically into a tax-advantaged savings account similar to an Individual Retirement Account (IRA).

A) True
B) False

Correct Answer

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verified

Economists agree that if a monetary policy rule is to be used,the best one makes the growth rate of the money supply constant.

A) True
B) False

Correct Answer

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verified

The laws that created the Fed give it only vague recommendations about what goals it should pursue,and they do not tell the Fed how to pursue whatever goals it might choose.

A) True
B) False

Correct Answer

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It is possible that the cost of inflation reduction might be quite large compared to the annual costs of moderate inflation.

A) True
B) False

Correct Answer

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In practice,the problems created by time inconsistency and the political business cycle appear to be quite serious.

A) True
B) False

Correct Answer

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Economists predict the business cycle well enough that stabilization policy is likely to work despite lags in the effects of policy.

A) True
B) False

Correct Answer

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When the government has a deficit,a burden is necessarily imposed on future generations of taxpayers.

A) True
B) False

Correct Answer

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verified

The cost of inflation reduction is less if people believe that the central bank will really reduce inflation.

A) True
B) False

Correct Answer

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Social Security transfers wealth from younger generations to older generations.

A) True
B) False

Correct Answer

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A reduction in the marginal tax-rate includes an income effect that tends to increase savings.

A) True
B) False

Correct Answer

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verified

A reduction in the marginal tax-rate includes a substitution effect that tends to increase saving.

A) True
B) False

Correct Answer

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The Obama administration believed that transfer payments to the unemployed would have a larger impact on aggregate demand than tax cuts.

A) True
B) False

Correct Answer

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In essence,a consumption tax puts all saving into tax-advantaged savings accounts.

A) True
B) False

Correct Answer

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To counter the recession of 2008-2009 President Obama and congress created a large increase in government expenditures.

A) True
B) False

Correct Answer

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Showing 21 - 39 of 39

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