9.2 Questions
increases economic output
A basic principle of supply-side theory is that a tax cut
the crowding-out effect, high-interest payments, and the influence of foreign debt-holders
The dangers associated with having a large national debt are
to investors who hold government bonds
To whom does the government owe the national debt?
its ability to levy taxes and borrow money
What gives the federal government its enormous power to influence demand through spending?
It borrows more
What is the most common method the federal government uses to pay for expenditures that exceed revenues?
People with limited savings could not afford to wait for the market, on its own, to restore equilibrium.
When John Maynard Keynes said, "In the long run we are all dead," what serious economic point was he making?
increased spending on defense
Which of the following factors contributed to the deficit spending of the 2000s?
foreign ownership of debt
Which of the following is considered a problem associated with a large national debt?
Milton Friedman
Whose economic ideas and beliefs most closely match this statement: "Let the free enterprise system solve economic problems, not the government"?
Demand should have increased as prices fell, but it did not
During the Great Depression, the U.S. economy seemed to defy the theories of classical economics. Which of the following illustrates this point?
increased spending
During the Great Depression, the federal government followed the ideas of John Maynard Keynes and
through a tax cut
How did President Reagan apply supply-side economics to promote economic recovery in the 1980s?
He instituted policies based on supply-side economics
How did President Reagan bring about a shift in U.S. economic policy?
automatic stabilizers
Look at the graph. Which of the following has most likely played a role in changing in the pattern in annual GDP changes between 1920 and the present?