Union contracts with built-in cost-of-living adjustments and home mortgages that vary with the rate ...

Union contracts with built-in cost-of-living adjustments and home mortgages that vary with the rate of inflation are:
 a. inappropriate ways of combating inflation.
  b. examples of bracket creep.
  c. means of implementing fiscal policy.
  d. steps that can be taken to decrease the adverse impacts of inflation.
  e. examples of failed discarded policies of the 1970s.

QUESTION 2

Tax cuts, by providing incentives to work, save, and invest, will raise employment and lower the price level. This argument is made by the:
 a. Keynesian economists.
  b. supply-side economists.
  c. classical economists.
  d. monetarists.

QUESTION 3

Which of the following curves show an inverse relationship between a nation's inflation and unemployment rates?
 a. The aggregate demand curve.
  b. The aggregate supply curve.
  c. The short-run Phillips curve.
  d. The long-run Phillips curve.

QUESTION 4

Suppose that last year you borrowed 100 at 5 percent interest to purchase a 100 pair of Nike cross-training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year, your purchase of the shoes would:
 a. make you an inflation winner as you saved 5 on the shoes.
  b. make you an inflation loser as you paid 5 more than you should have for the shoes.
  c. not be affected at all by the inflation rate.
  d. be taxed according to COLA adjustments.
  e. make you an inflation loser because of bracket creep.

QUESTION 5

Lower marginal tax rates encourage people to work, save, and invest, resulting in more output and a larger tax base. This statement most closely reflects which of the following schools of economic thought?
 a. Keynesian.
  b. Adam Smithian.
  c. Aggregate demandian.
  d. Supply-side economics.

QUESTION 6

Suppose that the economy experiences an increase in the inflation rate at the same time that the unemployment rate decreases. This situation indicates a:
 a. shift in the Phillips curve.
  b. movement along a vertical Phillips curve.
  c. movement along a horizontal Phillips curve.
  d. movement along a positively-sloped Phillips curve.
  e. movement along a negatively-sloped Phillips curve.

QUESTION 7

Losers from inflation include:
 a. savers and borrowers.
  b. landlords and the government.
  c. borrowers and the government.
  d. those on a fixed income and borrowers.
  e. those on a fixed income and savers.

QUESTION 8

Which of the following is emphasized by supply-side economics?
 a. The impact of budget deficits on interest rates and aggregate demand.
  b. The impact of government spending on aggregate demand, output, and employment.
  c. The impact of marginal tax rates on aggregate supply.
  d. The impact of budget deficits on the rate of taxation in the future.