Which of the following best explains why the federal tax rebates in the 2000s had almost no effects on aggregate demand?
A. According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because they were accompanied by more government spending.
B. According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because taxpayers did not believe the rebates would occur.
C. According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because they did not change taxpayers' permanent income.
D. According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because there were no direct expenditure offsets.
Answer: C
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The figure above shows a perfectly competitive firm. To maximize its profit, the firm will produce ________ units of output and the price will be ________ for a unit
A) 30; $40 B) 30; $30 C) 20; $40 D) 20; $30
At full-employment GDP,
A) the long-run aggregate demand curve is horizontal. B) the long-run aggregate demand curve is vertical. C) the long-run aggregate supply curve is horizontal. D) the long-run aggregate supply curve is vertical.
Producers are willing to offer greater quantities for sale at higher prices because
What will be an ideal response?
If the product derived from the last dollar spent on labor is less than the product derived from the last dollar spent on capital, then the firm
A. should use more labor and less capital to minimize costs. B. should use less labor and more capital to minimize costs. C. is minimizing costs. D. should increase the price paid to labor and decrease the price paid to capital to minimize costs.