ECON test 4

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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


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Curzon, partition of Bengal, Morley Minto Ref

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