Problem 1: Supply siders argue that policies pursued by the Reagan administration after 1981 undermined the effect of the 1981 tax cuts. Which of the following policies has been cited by supply siders?
a) The minimum wage was increased
b) Trade protectionist legislation was passed
c) Government expenditures decreased along with the decrease in revenues
d) Some of the incentives to business investment were reversed
Problem 2: A cut in income taxes tends to
a) Permanently shift both short-run Phillips Curve and aggregate demand
b) Temporarily shift the short-run Phillips Curve and to permanently increase aggregate demand
c) Permanently shift the short-run Phillips Curve and to temporarily increase aggregate demand
d) Temporarily shift both the short-run Phillips Curve and aggregate nominal demand
Problem 3: According to Gordon, fiscal policy â??is severely flawed as a means of controlling the economy over the short-runâ? because of
a) the effects of temporary tax policy changes are unpredictable
b) the effects of temporary tax policy changes are small
c) the long time required for Congressional debate
d) All of the above