An increase in interest rates by the Federal Reserve is an example of ________ policy.
A. monetary
B. structural
C. aggregation
D. fiscal
Answer: A
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Assume that a 50 percent gasoline tax led to a large increase in its price and only a small decrease in the quantity of gasoline demanded. Economic analysis would lead one to conclude that
A) gasoline should not be taxed because the benefits are uncertain. B) the benefits of taxing gasoline is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it. C) gasoline should be taxed because the benefits of the tax would exceed the costs. D) gasoline should not be taxed on ethical grounds since ethical benefits and costs can't be measured.
Redistribution can be thought of as insurance because _____
a. those with low incomes often do not think of purchasing insurance b. those with low incomes cannot afford insurance c. individuals want to protect themselves from the small probability that they might become impoverished d. a and b
A firm's rate of technical substitution is represented graphically by
a. the slope of the line connecting the origin with the relevant point on the isoquant. b. the negative of the slope of the line connecting the origin with the relevant point on the isoquant. c. the slope of the isoquant at the relevant point. d. the negative of the slope of the isoquant at the relevant point.
If firms are producing at a profit-maximizing level of output where the price is equal to the average total cost:
A. average total cost must be minimized. B. economic profits must be zero. C. accounting profits must be positive. D. All of these are true.