Suppose the president is successful in passing a $10 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.8. What happens to equilibrium GDP?
A) There is a $50 billion increase in equilibrium GDP.
B) There is a $40 billion increase in equilibrium GDP.
C) There is a $40 billion decrease in equilibrium GDP.
D) There is a $50 billion decrease in equilibrium GDP.
C
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The purpose of commodity buffer stocks is
(a) to moderate price fluctuations. (b) to raise commodity prices. (c) to encourage commodity substitution. (d) to guarantee national security.
Which of the following statements about the relationship between economic costs and accounting costs is true?
A. Accounting costs are always greater than economic costs. B. Accounting costs must always equal economic costs. C. Accounting costs are always less than or equal to economic costs. D. Accounting costs are equal to or greater than economic costs.
Answer the following statement true (T) or false (F)
1) If price and total revenue are directly related, demand is inelastic. 2) If price changes and total revenue changes in the opposite direction, demand is relatively elastic. 3) Cross elasticity of demand measures the effect of a change in the price of one product on the quantity demanded of another product. 4) Income elasticity measures the effect of a change in income on the purchases of some good or service. 5) If the coefficient of income elasticity of demand is positive, the product is an inferior good.
A self-regulating market
A. eliminates shortages or surpluses through price changes. B. can eliminate shortages quickly, but eliminates surpluses slowly. C. renders Say's law invalid. D. occurs only in labor markets.