If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil
a. will increase the demand for coal.
b. will reduce the demand for coal.
c. will increase the supply of coal.
d. will reduce the supply of coal.
e. will not affect the demand for coal.
A
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Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?
A) They would have to be replaced by a consumption tax. B) The government would not be able to spend money on any programs. C) Everyone would have to pay less in taxes. D) The deficit would increase because of lack of revenues.
Which of the following is a statement of positive economics?
a. I hope unemployment comes down soon. b. President X's way of dealing with unemployment is better than President Y's. c. I think everyone should sacrifice to reduce the deficit. d. If taxes are reduced, unemployment will drop.
When the Fed buys government bonds on the open market, the money supply expands
Indicate whether the statement is true or false
At a point on a production possibilities curve, opportunity cost of more capital goods today is
A. fewer consumer goods in the future. B. fewer capital goods in the future. C. fewer consumer goods today. D. more unemployed resources in the future.