The popular theory prior to the Great Depression that the economy will automatically adjust to achieve full employment in the long run is:
a. supply-side economics.
b. Keynesian economics.
c. classical economics.
d. mercantilism
QUESTION 2If a person is taxed 1,000 on an income of 10,000 . taxed 2,000 on an income of 20,000 . and taxed 3,000 on an income of 30,000 . this person is paying a(n):
a. progressive tax.
b. regressive tax.
c. proportional tax.
d. poll tax.
e. excise tax.
QUESTION 3In a two good, two-country world, a country has a comparative advantage in any good for which it has a:
a. lower absolute cost than the other country.
b. lower opportunity cost than the other country.
c. higher absolute cost than the other country.
d. higher opportunity cost than the other country.
QUESTION 4Prior to the Great Depression, classical economists believed that a recessionary downturn would be reversed by:
a. higher wages and prices.
b. lower wages and prices.
c. an expansionary monetary policy on the part of the Federal Reserve System.
d. an increase in government spending that would stimulate aggregate demand.
QUESTION 5If a person is taxed 100 on an income of 1,000 . taxed 220 on an income of 2,000 . and taxed 390 on an income of 3,000 . this person is paying a(n):
a. progressive tax.
b. poll tax.
c. regressive tax.
d. excise tax.
e. proportional tax.
QUESTION 6The theory of comparative advantage suggests that a(n):
a. industrialized country should not import.
b. country that is not competitive should import everything.
c. country specialize in producing goods or services for which it has a lower opportunity cost.
d. none of these.
QUESTION 7According to Say's law, there cannot be overproduction of goods and services because:
a. planned aggregate expenditures sometimes fall short of total output.
b. prices and wages are sticky or inflexible in the downward direction.
c. demand creates its own supply.
d. supply creates its own demand.
QUESTION 8If a person is taxed 100 on an income of 1,000 . taxed 200 on an income of 2,000 . and taxed 300 on an income of 3,000 . this person is paying a(n):
a. progressive tax.
b. poll tax.
c. regressive tax.
d. excise tax.
e. proportional tax.
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