Which of the following fiscal policy changes would be the most contractionary?
A. A $40 billion increase in taxes
B. A $20 billion increase in taxes and a $20 billion cut in government purchases
C. A $30 billion increase in taxes and a $10 billion cut in government purchases
D. A $10 billion increase in taxes and a $30 billion cut in government purchases
Answer: D
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An increase in the amount of physical capital will cause
A) an increase in both aggregate demand and real GDP, but have no effect on the price level. B) an increase in both aggregate supply and real GDP, but have no effect on the price level. C) aggregate demand and aggregate supply to increase by the same amounts, causing real GDP to increase and the price level to remain constant. D) an increase in both aggregate supply and real GDP and a reduction in the price level.
Men and women in a particular industry are equally qualified. If one employer has a preference for male employees, then in the long run
a. men will receive higher wages b. women will receive higher wages c. there will be no wage differential between men and women d. comparable worth laws would create wage differentials between men and women e. the demand for male employees will decrease
Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by
a. less than $0.50. b. $0.50. c. between $0.50 and $1. d. $1.
According to the law of diminishing returns, what will happen if a population increases with no corresponding increase in other resource inputs?
a. Output per capita will eventually rise sharply b. Output will rise, but by ever smaller amounts. c. Output will eventually cease altogether. d. Workers will become increasingly efficient.