Suppose a carpenter builds a bookcase for an attorney in exchange for legal services. This transaction is
a. a means of tax avoidance
b. likely to be taxed
c. not part of the economy's total production
d. a means of tax evasion
e. likely to result in double taxation
D
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If a $500 tax is placed legally (statutorily) on the buyers of new couches and as a result the price of couches at stores rises by $200, the actual burden of the tax
a. falls completely on couch buyers. b. falls completely on couch sellers. c. is $200 on couch buyers and $300 on sellers. d. is $300 on couch buyers and $200 on sellers.
Grace consumes two goods: iced tea and spaghetti. The price of iced tea is $2 per bottle. Her income is $500 per month. Grace spends all her income each month. She purchases 50 bottles of iced tea and 100 servings of spaghetti. What is the price of a serving of spaghetti?
a. $10 b. $5 c. $4 d. $2
Implied in new Keynesian theory is that when policy is correctly anticipated, there is a tradeoff between inflation and unemployment in
A) neither the short run nor the long run. B) both the short run and the long run. C) the short run, but not in the long run. D) the long run, but not in the short run.
Figure 14.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that 50% of used cameras in the market are lemons (low quality), what fraction of used cameras sold will actually be plums (high quality)?
A. 10/25 B. 10/35 C. 25/35 D. None of the cameras sold will be plums.