If the federal government has a deficit, and the current account is in balance, then
a. I = S.
b. I > S.
c. S > I.
d. S + I = 0.
c
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Refer to the scenario above. Which family pays the lowest percentage of its income as taxes if the government follows a progressive tax system?
A) The first household B) The second household C) The third household D) The fourth household
The primary function of reserve requirements is to serve as
A) a source of bank liquidity. B) an instrument of monetary control. C) a means of reducing bank profits. D) a means of controlling the amount of currency in the banking system.
Is it possible to design a tax that does all of the following: i) leaves behavior unchanged so that the quantity demanded of goods and services does not change, ii) creates no excess burden, iii) is not regressive, and iv) is welfare enhancing?
What will be an ideal response?
A profit-maximizing monopolist
a. never produces on the inelastic portion of the demand curve because it can increase profit by increasing output b. never produces on the inelastic portion of the demand curve because marginal revenue exceeds marginal cost c. always produces on the inelastic portion of the demand curve d. never produces on the elastic portion of the demand curve because there are no substitutes for the good it produces e. never produces on the inelastic portion of the demand curve because marginal revenue is negative there