Interest earned on personal savings accounts is currently subject to taxation. What may happen to economic growth in the United States if Congress passes legislation exempting this interest from taxation?
If Congress exempts interest earned on personal savings accounts from taxation, then the higher net
earnings may induce Americans to save more. More saving may result in higher levels of investment.
Capital deepening may occur, leading to higher labor productivity and economic growth.
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For computers and other business equipment, small changes in business earnings tend to generate relatively large short-run changes in the demand for this equipment, and the long-run income response tends to be smaller. Industries that face demand behavior of this type are known as:
A. natural monopolies. B. cartels. C. cyclical industries. D. constant-cost industries.
The Taylor rule accurately predicted the changes in the federal funds target during the period
A) when Alan Greenspan was the chairman of the Federal Reserve Board. B) when Paul Volcker was the chairman of the Federal Reserve Board. C) when William McChesney Martin was the chairman of the Federal Reserve Board. D) when Arthur Burns was the chairman of the Federal Reserve Board.