Explain why proponents of supply-side effects of tax rate variations who also believe that tax-rate changes influence aggregate demand might claim that cuts in marginal income tax rates can potentially push up real Gross Domestic Product (GDP)
without generating inflation.
According to supply-side economics, a reduction in marginal income tax rates causes the aggregate supply curve to shift rightward. If such tax-rate reductions also cause total planned expenditures to rise and generate an equal-sized rightward shift of the aggregate demand curve, then equilibrium real Gross Domestic Product (GDP) rises, but the equilibrium price level remains the same.
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What is "brain drain"?
A) increased recruiting efforts that attempt to raise the average level of education in developed nations B) the loss of highly educated people from a low-income country as they move to higher-income opportunities in foreign countries C) foreign direct investment that flows from a developed country to a developing country D) the tendency for highly educated workers in high-income countries to move to low-income countries to volunteer their services
If the government thinks the price that a consumer has to pay for a good is too low, then which of the following would solve this problem?
a. a price ceiling or an excise tax b. a price floor or an excise tax c. a price ceiling or a subsidy d. a price floor or a subsidy e. none of the above will lower the price a consumer has to pay for a good