Suppose the U.S. dollar depreciates, and monetary authorities respond to stabilize both output and inflation. Which of the following is a correct description of the short-run consequences?
A) output, inflation, and the real interest rate have all increased
B) output, inflation, and the real interest rate have returned to their original values
C) output and inflation are higher, while the real interest rate has fallen
D) output and inflation have returned to their original values, while the real interest rate is increased
D
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According to this Application, some conservatives worry that a value-added tax ________ and some liberals worry that a value-added tax ________
A) will penalize high-income individuals; will decrease per-capita GDP B) will discourage consumers from saving; will decrease federal tax revenue C) will result in consumers not realizing all the taxes they pay; is regressive D) is progressive; will reduce investment.
Tobin's q theory adds to neoclassical theory because it ________
A) illustrates the important relationship between tax rates and the incentive to labor B) emphasizes the role played by asset price fluctuations on investment spending C) highlights the impact of a tax increase on business investment D) underlines the relationship between financial innovation and the financial crisis of 2007-2009