Question

Supply-side economics focuses on the

Multiple Choice

• size of the tax multiplier.

• federal income tax share of GDP.

• marginal tax rate.

• average tax burden

2.

Which of the following will happen if the supply of loans increases?

Multiple Choice

• The interest rate will fall, and the quantity of money borrowed will decline.

• The interest rate will rise, and the quantity of money borrowed will increase.

• The interest rate will fall, and the quantity of money borrowed will increase.

• The interest rate will rise, and the quantity of money borrowed will decline.

3.

All other things being equal, globalization

Multiple Choice

• benefits countries that have wealthy, highly educated workforces, and hurts countries that have poor, badly educated workforces.

• benefits people whose skills are relatively scarce on world markets, and hurts those whose skills are relatively common.

• benefits manufacturing firms and hurts service firms.

• benefits countries that have relatively low wages, and harms countries that have relatively high wages.

4.

In the private sector, all transactions are voluntary, so

Multiple Choice

• there are always winners and losers.

• often too few transactions will take place.

• individuals are required to participate.

• presumably all parties benefit.

  5. A nation has a comparative advantage in producing a good, if

  Multiple Choice

• it has a higher standard of living than its trading partners.

• more people in the country are employed in the production of the good than in other countries.

• it has either a greater productivity advantage or a smaller productivity disadvantage.

• it also has an absolute advantage in producing the good.

Answer 1

a) Supply side economics focuses on the marginal tax rate. the answer is "C".

b) "C"

An increase in the tax multiplier will lead to a decrease in the interest rate and that will increase the amount of money borrowed in the market.

c) "D"

Globalization has benefited the nations that have a low wages compared to high wages nations as the production units have shifted to the low wages nations to benefit from the low wages.

d) "D"

As the transactions are voluntary all the party participating in the transaction are there for some benefit.

e) "C"

If there is either a greater productivity advantage or a smaller productivity dis advantage.