Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE1 might be:
A. interest rates decrease.
B. domestic income decreases.
C. expected profitability of investments increase.
D. wealth level decreases.
Answer: D
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The demand for labor is described as a derived demand because
A) it is derived from the demand for products that use labor in the production process. B) it is derived by workers seeking to earn income to fund the consumption of goods and services. C) it is derived from government institutions which rely on labor markets for the purpose of raising tax revenue. D) it is derived by producers seeking to make profits by starting new businesses.
Bracket creep forces taxpayers to pay a larger percentage of their income in taxes when which of the following occurs?
(a) The emergence of high unemployment (b) Inflation (c) Deflation (d) The growth of trade deficit(s)
If the return on capital is less than the cost of capital
A) economic profits are zero. B) accounting profits are zero. C) then accounting profits minus economic profit are zero. D) economic profits are negative.
The two defining characteristics of pure private goods are
a. nonrivalry and excludability b. positive externalities and efficiency c. nonexcludability and nonrivalry d. efficiency and profitability e. rivalry and excludability