According to the Laffer curve, an increase in the tax rate will increase tax revenue
A. if the economy is on the positively sloped section of the curve.
B. if the economy is on the negatively sloped section of the curve.
C. no matter the location of the economy on the curve.
D. if the economy is at the farthest point out on the curve.
Answer: A
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People ________ their labor supply in response to a temporary decrease in government purchases because
A) increase; current or future taxes will decrease, making them financially better off. B) decrease; current or future taxes will decrease, making them financially better off. C) decrease; current or future taxes will increase, making them financially worse off. D) increase; current or future taxes will increase, making them financially worse off.
Suppose the multiplier has a value that exceeds 1, and there are no crowding out or investment accelerator effects. Which of the following would shift aggregate demand to the right by more than the increase in expenditures?
a. an increase in government expenditures b. an increase in net exports c. an increase in investment spending d. All of the above are correct.