Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). In the Application, Anil Kasyap found that in periods of high inflation:
A. prices tended to change more frequently.
B. prices tended to change less frequently.
C. prices do not change at all.
D. prices change equally as often as during periods of low inflation.
Answer: A
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The tax multiplier is negative because increases in taxes lead to decreases in consumer spending
Indicate whether the statement is true or false
A regulatory agency that imposes a price ceiling in order to limit monopoly profits to a "fair rate of return" is forcing the monopolist to sell at a price equal to
a. average fixed cost. b. average total cost. c. marginal cost. d. average variable cost.
The category of spending called "food away from home" makes up a smaller proportion of the market basket than which of the following categories?
A. Food at home B. Gasoline C. Medical care D. Education
Other things being equal, a national health insurance program would
A) decrease the demand for health care. B) decrease moral hazard. C) decrease total health care expenditures. D) reduce individuals' incentives to make decisions that promote better health.