According to the Theories of "Reaganomics

question 19

Multiple Choice

According to the theories of "Reaganomics,"

• A) by increasing revenue from taxes, the country could spend more for defense programs.
• B) by cutting taxes, the country's economy would expand and produce more revenue for the federal government.
• C) by reducing defense programs, the country could spend more money on domestic programs.
• D) by eliminating the income tax and adopted a national sales tax, the country could afford to spend more money on both domestic and defense programs.
• E) by raising the income tax and increased corporate taxes, the country could expand its domestic and defense programs.

Recognize how external economic forces like inflation and recession affect the overall economy and individual financial decisions.

Identify changes in consumer income levels and their impact on spending habits.

Understand the concept of discretionary income and its calculation.

Recognize the impact of economic behaviors and conditions on discretionary income.

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Definitions:

Price-Taker Firm

A business that has no control over the market price of its products and must accept the prevailing market price.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and opportunity costs.

Opportunity Cost

The highest valued alternative that must be sacrificed as a result of choosing an option.