Refer to the figure below. If box A represents households, B the product market, and C businesses, and if flow (3) represents revenues, then flow (1) would represent:
A. Costs
B. Money income
C. Consumption expenditures
D. Resources
Answer: C
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A country that has an absolute advantage in producing all goods will ________
A) have a comparative advantage in some goods but not all B) produce all goods at lowest opportunity cost C) have a comparative advantage in all goods D) not gain from specialization and trade
Stimulating aggregate demand to reduce unemployment will aggravate inflation.
Answer the following statement true (T) or false (F)
Why do some policymakers support a consumption tax rather than an earnings tax?
a. The average tax rate would be lower under a consumption tax. b. A consumption tax would encourage people to save earned income. c. A consumption tax would raise more revenues than an income tax. d. The marginal tax rate would be higher under an earnings tax.
A price decrease will cause total revenue to fall if
A. Demand is inelastic. B. Demand is unitary elastic. C. The price elasticity of demand is less than zero. D. Demand is elastic.