Economists Such as James Tobin and Paul Samuelson Claimed That

question 25

Multiple Choice

Economists such as James Tobin and Paul Samuelson claimed that _________ provided solid evidence of the effectiveness of Keynesian policies.

• A) increases in deficit spending accompanied by extremely low unemployment during WWII
• B) increases in taxes accompanied by rising federal budget surpluses
• C) increases in the money supply accompanied by falling interest rates
• D) price controls accompanied by inflation

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase its profits by increasing sales.

Profits

The financial gains that remain after subtracting all expenses from revenue, indicating the financial success of a business.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, indicating the degree to which fixed costs are used in production.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain them.