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.
What will be an ideal response?
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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Michelle spends all of her income on mangos and rice. Mangos cost $2 per pound and rice costs $1.50 per pound
If Michelle is spending all of her income and the marginal utility per dollar spent is 20 for the last pound of mangos purchased and 10 for the last pound of rice purchased, then A) Michelle is maximizing utility from her present consumption bundle. B) Michelle should buy more rice and fewer mangos in order to maximize utility. C) Michelle should buy more mangos and less rice to maximize utility. D) None of the above answers is correct.
Fogel and Engerman (1974) find evidence to suggest that young slave children were often sold by profit-maximizing slave owners
Indicate whether the statement is true or false