ECON test 4
Governments may restrict free and competitive markets by_______
restricting entry into markets
Among the counterproductive policies often followed by gov'ts of LDCs are _________ (3)
restrictions on international trade, excessive inflation, a large government
The social security tax is a ______ tax
regressive
the federal personal income tax is ______ complicated
extremely
The federal personal income tax was authorized in _____ by the ______ Amendment
1913, 16th
At a growth rate of 2% a year, a nation will double its per capita GDP in _______ years
35
The social security tax generates about ______% of all federal tax revenues
37
The federal personal income tax initially had a top marginal tax rate of _____%
7
The largest exporter in the world is______
China
True or False: Neoclassical growth theory is closely associated with Robert Solow and treats technological advances as essentially random
False
True or False: Private property rights can be strengthened by increasing tax rates, government regulation, and government corruption
False
True or False: Strong property rights provide more incentive for resource owners to develop and hinder a nation's efforts to achieve economic growth
False
True or False: When a trade restriction is imposed on an imported good, a consumer surplus will occur, domestically, and domestic producers will receive producer's surplus
False
_______ is the largest federal spending program
Social security
An increase in Real GDP means
absolute economic growth
"The resource curse," refers to countries that have _____ natural resources but a weak economy
abundant
Having abundant natural resources guarantees that a country will_______
achieve economic growth
Industrial policy is government ______ to those industries that have the greatest_________
aid, potential for future growth
In order for a nation to trade according to comparative advantage, its government must ______
allow free trade
Excess burden is the______that the burden imposed by a _______ exceeds the ________ provided by the tax
amount, tax, funding
The law of comparative advantage states that trade between nations is ________ to ______ nations if there is a _______ in opportunity costs
beneficial, both, difference
When a nation engages in international trade according to comparative advantage, the nation ______ overall
benefits
The political reason that trade restrictions are imposed is the _____ of trade restrictions are concentrated on a few _______, while the costs are dispersed over many_______
benefits, producers, consumers
If the US has a trade deficit in its trade with China,________ nations _____ from trade
both, gain
to minimize the deadweight loss, a tax should be _____ based and have _____ rates
broad, low
A rapid population growth rate is an obstacle for LDCs because it means a high _______ _______ and a large percentage of the _______ will be __________
dependency ratio, population, children
Weak property rights discourage the _______ of _______ by the domestic economy
development, resources
LDCs tend to have unsafe _____ _______ and inadequate _________
drinking water, sanitation
The corporate income tax tends to ______
drive up consumer prices
Nations with greater economic freedom usually achieve more________ _______ than nations with less economic freedom
economic growth
A stable price level requires_____
extensive use of price controls
The burden of deficit spending falls on future generations to the _______ that the deficit spending is financed by _____ creditors
extent, foreign
Loopholes cause the _______ ______ tax to be more _____
federal income, complicated
Weak property rights also discourage _______ investment in the ______ economy
foreign, domestic
Governments of LDCs may weaken private property rights by practicing _____________
gov't expropriation of private property
the federal personal income tax costs the _____ billions to _____
gov't, collect
Deficit spending allows the ____ to use a larger share of the _____ resources
gov't, limited
The social security tax is partially ____ from taxpayers
hidden
Governments of LDCs may weaken private property rights by permitting______________
high rates of crime
The federal personal income tax has much______tax rates today than it initially had
higher
Deficit spending causes _____ interests rates, which ______ out consumption
higher, crowd
In a free market economy, more new _____ will be generated than in a _______ _______ economy
ideas, centrally planned
Technological advance can result from ______
improved capital
LDCs tend to have _______ ______ services
inadequate medical
When a trade restriction is imposed on an imported good, _______ is redistributed from ____ consumers to _____ producers
income, domestic, domestic
An increase in labor productivity will________
increase the real GDP
Since the federal personal income tax is a progressive tax, the average federal income tax rate ______ as income increases
increases
Deficit spending _____ the gov't's demand for _____ funds, driving up ____ rates
increases, loanable, interest
Governments of LDCs may weaken private property rights by maintaining ___________
inefficient court systems
Transferring resources from the private sector to the public sector means transferring the resources from the generally__________ private sector to the generally more____ public sectore
inefficient, efficient
LDCs tend to have high ____________ rates
infant mortality
In recent years. the U.S. has had ______ trade deficits
large
Gov'ts in LDCs tend to be relatively large due to a relatively_________ military, leading to large ______ ______, and higher ______ rates
large, budget deficits, tax
A quota is a legal ________ on the quantity of a good that may be_______
limit, imported
LDCs (less developed countries) are defined as having a relatively low _____ ______ _____ _______
low capita real GDP
Increases in capital are______
made possible by saving
Since the federal personal income tax is progressive, the _____ of the tax is paid by the top _____% of income earners
majority, 10
The total amount the federal gov't owes it creditors is the ________
national debt
If the exchange rate for the US dollar depreciates, US ______ _______ will ________
net exports, increase
if the quantity of labor increases, but there is no increase in capital and no improvement in technology__________ will likely increase
per capita real GDP
Malnutrition hinders _______ and ______ growth in _______
physical, mental, children
Industrial policy may fails to promote economic growth if aid is determined by_______ not, _______
politics, economics
Among obsacles to economic development faced by LDCs is _______ _____ of public services
poor provision
Among the counterproductive policies often followed by gov'ts of LDCs are ________ _______ of public services
poor provision
Industrial policy may fails to promote economic growth if the government is unable to accurately _________
predict the future
The burden of deficit spending falls on the current generation to the extent that _____ is crowded out by increased gov't use of ________
private consumption, resources
A tax that imposes higher tax rates on higher levels of income is_______
progressive
The federal personal income tax is a _______ tax
progressive
A tax that imposes the same tax rate on all levels of income is:
proportional
Among the necessary functions of government are ______
protection of private property rights
LDCs often experience excessive inflation because the gov't pursues __________________
rapid money supply growth
Loopholes _____ the tax base
reduce
Deficit spending _____ present investment, which leads to ______ economic growth in the future
reduces, slower
A tax that imposes higher tax rates on lower levels of income is_____
regressive
The social security tax is the_____ largest source of _______ tax revenue
second, federal
To achieve long run economic growth, a country must______ its _______ outward
shift PPF
the federal personal income tax would be a better tax if it were_______
simpler to collect and to comply with
The law of comparative advantage indicates that a nation should _______ in producing where it can produce at a ______ _______ ________
specialize, lower opportunity cost
According to classical growth theory, population growth will drive the __________
standard of living down to a subsistence level
When a nation engages in international trade according to comparative advantage, _____ producers who face increased competition from imports may _____ _____
suffer losses
A tariff is a ______ on an _____ goood
tax, imported
Loopholes cause the ____ base for the federal personal income tax to be _____
tax, narrower
the federal personal income tax costs the ____ billions to _______ with
taxpayers, comply
New Growth Theory argues that the ______ advance made possible by new ideas is______
technological, virtually unlimited
The sources of excess burden include: (3)
the deadweight loss of the tax, the cost for the gov't to collect the tax, the cost for the taxpayers to comply with the tax
To maintain low tax rates________
the government needs to be small
When a nation's imports exceed its exports, the nation has a _______ ______
trade deficit
Industrial policy may fails to promote economic growth if ________ ________ are imposed
trade restrictions
The law of comparative advantage indicates that a nation should ____ for goods where it must incur a _______ _______ cost to produce
trade, higher, opportunity
A cultural norm that may hinder economic development is _______
traditionalism