The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
A) consumer surplus. B) the income effect.
C) producer surplus. D) the substitution effect.
A
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Demand deposits are: a. assets of banks, liabilities of depositors. b. liabilities of banks, assets of depositors. c. assets of banks and their depositors
d. liabilities of banks and their depositors.
Sam wins a Mega Millions jackpot worth $3 million. Which of the following is most likely true of Sam's consumption function? a. His consumption function will be flatter
b. His consumption function will be steeper. c. His consumption function will shift upward. d. His consumption function will shift downward.
A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm
A. should hire more labor because this will increase profits. B. is currently hiring the profit-maximizing amount of labor. C. should hire more labor, although this may either increase or decrease profits. D. is selling its product in an imperfectly competitive market.
Automatic stabilizers "lean against the prevailing wind" of the business cycle because:
A. wages are controlled by the minimum wage law. B. federal expenditures and tax revenues change as the level of real GDP changes. C. the spending and tax multipliers are constant. D. they include the power of special interests.