The Laffer curve shows that as tax rates increase
A. tax revenues increase as more individuals and businesses have to pay taxes.
B. tax revenues decrease as the incidence of cheating on tax returns increases.
C. tax revenues remain unchanged.
D. initially tax revenues increase, then decrease.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. In a contestable market with room for many firms, industry output will be the same as in a successful cartel. 2. The Cournot oligopoly model is based on the assumption that firms treat their rivals' output as fixed and given. 3. Firms' total output is higher in the Cournot oligopoly model than in the Bertrand oligopoly model. 4. In both competition and monopolistic competition, free entry and exit guarantee that the industry's output is produced at the least possible cost. 5. Social welfare would be increased if a monopolistically competitive industry were replaced with a competitive industry.
For each of the following values of nominal GDP and real GDP, calculate the GDP price index
a. Nominal GDP = $600; real GDP = $800. b. Nominal GDP = $900; real GDP = $900. c. Nominal GDP = $1,200; real GDP = $1,000.
Which of the following is not a component of investment spending?
A) spending by firms on equipment B) the purchase of 1000 shares of corporate stock C) residential construction D) changes in inventories
The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that:
A. the higher-paying company will attract the more creative and innovative pickers and the lower-paying company will attract the others. B. the lower-paying company will attract the more creative and innovative pickers and the higher-paying company will attract the others. C. the company willing to pay only $4.00 has a comparative advantage in selling morels. D. this situation violates the law of one price and is not likely to persist.