While in office, President Obama discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes would affect the aggregate demand curve
What will be an ideal response?
Raising the income tax decreases the amount of disposable income available to those households. Lower disposable income decreases consumption at every price level. The result is a shift in the aggregate demand curve to the left.
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If at the prevailing interest rate the quantity of money demanded is $2 trillion, and the supply of money is $1.5 trillion, then which of the following istrue?
a. There is a shortage of money, and consequently interest rates must fall in order to achieve an equilibrium in the money market. b. There is a surplus of money, and consequently interest rates must fall in order to achieve an equilibrium in the money market. c. There is shortage of money, and consequently interest rates must rise in order to achieve an equilibrium in the money market. d. There is a surplus of money, and consequently interest rates must rise in order to achieve an equilibrium in the money market.
The economic benefits of owning a home are greater when home prices are
A. falling and interest rates are high. B. rising and interest rates are low. C. rising and interest rates are high. D. falling and interest rates are low.
Consider a firm with the following cost and revenue information: ATC = $8, AVC = $7, and MR = MC = $6. If the firm produces Q = 60 in the short run, it:
A. is minimizing losses. B. makes a total loss of $60. C. should produce more output. D. should shut down.
According to Keynes, involuntary unemployment is possible because of
A. long-term labor contracts. B. flexible wages. C. government interference in the market economy. D. free exchanges in markets.