The 1981 tax reform act reduced taxes on high-income individuals. Many economists believed that high tax rates would deter high-income individuals from working and investing, thus slowing the growth of income. This illustrates the issue of
a. the equality-efficiency trade-off.
b. usury.
c. the effects of budget deficits on future generations.
d. the cost disease of the public sector.
e. the importance of externalities.
a
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A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to
A) no effect on the unemployment rate. B) an increase in the natural unemployment rate. C) a decrease in the natural unemployment rate but an increase in the actual unemployment rate. D) a decrease in the unemployment rate. E) a decrease in the country's potential GDP.
Last year U.S. net exports of goods and services was negative. This fact means that last year
A) there was an error made when calculating net exports of goods and services for the United States. B) the value of U.S. exports was greater than the value of U.S. imports. C) the value of U.S. exports was less than the value of U.S. imports. D) U.S. consumption expenditure plus investment was less than the value of exports plus the value of imports. E) U.S. consumption expenditure plus investment plus government expenditures on goods and services was less than the value of exports plus the value of imports.