1) What is another name for supply side economics? 2) Whats is Monetary policy i
ID: 1214580 • Letter: 1
Question
1) What is another name for supply side economics?
2) Whats is Monetary policy is associated with?
3) Lower interest rates redistribute income from ____ to ____?
4) Which theorists believe a decrease in marginal tax rates will increase the incentives to work and invest?
5) When a country imposes tariffs it is likely to cause ___.
6) The current U.S. economy is based primarily on the production of what?
7) What are some reasons to restrict trade?
8) Through open market operations the Fed is able to influence what?
9) What is an example of supply side policy?
10) According to the consensus’ view when demand increases what will happen?
11) In a given year Charles spent $7,800 on rent, $2,700 on utilities, $4,500 on food, and $10,500 on tuition. What is the item weight for food?
12) When the money market is in equilibrium in the liquidity trap what will happen?
13) What policies were part of the educational tactics by supply siders?
14) If an investment has a rate of return of 1% per year then the investment will double in how many years?
15) An agreement to reduce the volume of trade in a specific good is what?
16) Which type of bank will concentrate mainly on smaller loans such as auto loans?
17) Higher unemployment and inflation rates will most likely occur when what happens?
18) Suppose the U.S. can produce 2000 cars or 2000 trucks. Japan can produce either 2000 cars or 1000 trucks. In terms of car production we can conclude what?
19) If a tax cut of 3% causes the output supply to increase by 6% what is the absolute value of the tax elasticity of supply?
20) What is the mantra often used by classical theorists?
Thanks in advance.
Explanation / Answer
Ans- 1) The other name of supply side economics is Reaganomics.
2) Monetary policy is associated with interest rates and availability of credit.
3) Lower interest rates redistribute income from creditors to debtors.
4) Supply side economics believe a decrease in marginal tax rates will increase the incentives to work and invest.
5)When a country imposes tariffs it is likely to cause Domestic Protection.
6)The current U.S. economy is based primarily on the production of agricultural goods.
7)What are some reasons to restrict trade-
There are many reasons of trade restriction.They are as follows-
1.TO PROTECT DOMESTIC JOBS FROM “CHEAP” LABOR ABROAD.
However, generally wages in industrialized countries are higher because their output per worker is higher. The high wages reflect higher productivity. Otherwise there is nocomparative advantage in producing that product and the owners would reduce wages to match productivity.
For example, the US has sugar import tariffs, making imported sugar more expensive than domestically-grown sugar. Thus, people in the US are going to buy US-grown sugar, which keeps money in the wallets of US sugar producers and farmers.
2. TO IMPROVE A TRADE DEFICIT.
Trade barriers make imports more expensive and also decreases demand for imports. However, trade partners can do the same and increase prices for exports. This policy also doesn’t necessarily fix the problem, if domestically produced goods aren’t competitive or are not of good quality. Countries will also spend less on imports if their exports go down.
3. TO PROTECT “INFANT INDUSTRIES”.
Countries want to give newly developing industries (known as infant industries) time to grow and become competitive. However, in some cases the government protection never ends and these industries become competitive only because they have been given the benefit of the trade barrier.
4. PROTECTION FROM “DUMPING”.
Dumping is when imports are sold at below average cost of production. It is generally hard to prove and sometimes countries impose anti-dumping duties just to buy more time.
5. TO PROVIDE MORE REVENUE.
Governments gain extra revenue from tariffs (taxes on imports). A tariff is a tax on imports. The tariff maybe in the form of a specific or ad valorem tax. Tariffs raise the price of the imported good and lowers its consumption.
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