The amount of government expenditures on a project or program should continue to increase for as long as the marginal benefits exceed the marginal costs
a. True
b. False
Indicate whether the statement is true or false
True
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"The income elasticity of a good is positive if a consumer increases the total spending on that good as a result of an increase in its market price." Do you agree or disagree? Why?
What will be an ideal response?
If an economy were experiencing a high rate of unemployment as the result of insufficient aggregate demand, a Keynesian economist would favor:
a. a reduction in taxes coupled with a reduction in government expenditures of equal size. b. an increase in government expenditures coupled with an increase in taxes of equal size. c. a reduction in taxes, without any offsetting reduction in government expenditures. d. maintenance of a balanced budget.
Which of the following is associated with relatively elastic demand?
a. Few substitutes; large portion of income; short time span b. Many substitutes; large portion of income; long time span c. Few substitutes; small portion of income; short time span d. Many substitutes; small portion of income; long time span
If marginal revenue and marginal cost are not equal, profit can be maximized by
a. increasing output if MR > MC. b. decreasing output if MC > MR. c. moving to the output where the slopes of TR and TC are equal. d. All of the above are correct.