According to supply-side economists, as tax rates are reduced, labor supply should increase. This implies that ?

A. There is no income effect when tax rates are changed
B. The income effect of a wage change is greater than the substitution effect of a wage change.
C. There is no substitution effect when tax rates are changed
D. The substitution effect of a wage change is greater than the income effect of a wage change

According to the Laffer curve, as tax rates increase tax revenue ?

A. Initially increase and then decrease
B. Decrease continuously.
C. Rise continuously
D. Initially decrease and then increase.

New classical economists advocate reducing welfare payments to people who are unemployed or single parents. The economic reasoning used was that this would ?

A. Reduce poverty
B. Reduce unemployment
C. Weaken the power of trade unions
D. Help small businesses

A way helping depressed regions by having wage subsidies lower business taxes and capital subsidies has been suggested as ?

A. New classical economists.
B. Left wing theorists
C. Interventionist policies.
D. Monetarists.

If a market generates a side effect or externlity then free market solutions ?

A. Maximize producer surplus
B. Are efficient
C. Are inefficient
D. Are equitable

A group of economists argue that the real problem with the economy is high rates of taxation and heavy regulation that reduce the incentives to work, save and invest. These economists are?

A. Supply-side economics
B. Neo-keynesian economists
C. Rational-expectations economists.
D. New classical economists.

According to Supply-side economists. if taxes are cut so that people have an increased incentive to work and businesses have an increased incentive to invest ?

A. Aggregate supply will increase will increase aggregate demand will decrease and the price level will decrease
B. Aggregate supply will increase will increase aggregate output will increase and the price level will decrease
C. Aggregate supply will increase will increase aggregate output will increase and the price level will increase
D. Both aggregate supply and demand will increase will increase and the price level will increase

Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike ?

A. Rs500
B. Rs300
C. Rs200
D. Rs400

Adam smith’s invisible hand concept suggests that a competitive market outcome ?

A. Maximizes total surplus
B. Generates equality among the members of society
C. Minimizes total surplus
D. Both maximizes total surplus and generates equality among the members of society

If a producer has market power (can influence the price of the product in the market) then free market solutions ?

A. Are equitable.
B. Are efficient
C. Maximize consumer surplus
D. Are inefficient