Economic True of False?
1) A marginal tax rate is the additional taxes owed as a percentage of additional income earned.
2) A fiscal stimulus package to cure an unemployment equilibrium is supported by the Keynesian model.
3) Contractionary fiscal policy is best suited to cotract an economy that is overheating.
4) Inflation preserves the value of money.
5) Monetary policy attempts to shift aggregate demand by varying the amount of money in circulation in the economy.
6) Quantity demanded increases when the price of a good falls.
7) A fiscal stimulus increases the aggregate demand curve.
8) Consumption expenditures represent the largest portion of the US GDP.
9) Government transfer payments shift income from one person to another and therefore do not produce a final good or service and hence are not part of GDP.
10) An increase in demand shifts the demand curve downward.
11) Personal income taxes represent the largest portion of governent receipts.
12) The unemployment rate is found by the ratio of the unemployed to the population.
13) Monetary policy has no impact on interest rates.
14) When the economy experiences economic growth, it is in the expansion phase of the business cycle.
15) Cyclical unemployment is a type of unemployment that can be predicted annually based on time of the year.
16) If the economy is in an unemployment equilibrium, a fiscal stimulus would lead the economy back to full employment.
17) When an economist speaks of capital the economist means the amount of money invested by the individual in any investment vehicle such as stocks, bonds, and mutual funds.