Question

Demand-pull inflation is caused by:

Select one:

a. anything that increases costs of production.

b. anything that increases aggregate demand.

c. anything that pulls down aggregate demand.

d. market power that increases profits.

Large-scale immigration of low-skill immigrants can result in:

Select one:

a. lower employment of native-born workers in low skill labor markets.

b. higher overall employment in low skill labor markets.

c. a lower wage in low skill labor markets.

d. all of the above.

A tax base is:

Select one:

a. an item that has a tax rate applied to it.

b. always expressed as a percentage.

c. always expressed as some form of income.

d. an item that has a tax credit applied to it.

Increased government spending financed by government borrowing will generally cause:

Select one:

a. an increase in interest rates.

b. some crowding out.

c. an expansion of the economy.

d. all of the above

Which of the following would not be used to reduce structural unemployment?

Select one:

a. relocation assistance.

b. policies to expand GDP.

c. policies to expand education.

d. retraining assistance.

Answer 1

1. B. Demand pull inflation occur when aggregate demand increases due to any reason.

2.D. All of the above. Increase in immigrant will increase the supply of labor and it will decrease the equilibrium wage rate and higher employment in low skill labor market

3.A. Tax base is an item that has tax rate applied on it.

4.B. Increase in G by borrowing will reduce private/personal investment and thus crowds out.

5. D. Retraining assistance will not help reducing structural unemployment