Last week, Gina's bakery sold fewer cupcakes than ever before. Regression to the mean implies that the bakery:
A. has probably had other bad weeks, but Gina can't remember them.
B. will sell more cupcakes this week.
C. should stop selling cupcakes.
D. is likely to go out of business.
Answer: B
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The government decided to reduce taxes on fast-food to increase revenue. The government assumes that fast-food products have
a. An inelastic demand b. An elastic demand c. A demand curve that is upward sloping d. Unitary elastic demand curve
One consequence of raising tax rates is that it
a. provides an added incentive to work b. provides less incentive to participate in the underground economy c. always increases total tax revenues d. leads to less underreporting of income e. leads to more underreporting of income
Which types of expenditures are autonomous?
In an article regarding Bangladesh's economy, the author suggests that the government give tax breaks on investment dollars, research and development, and donations to educational institutions. Suppose the multiplier in Bangladesh is 2. If the government enacts the proposed policies and __________, aggregate expenditure __________ in the short run.
a) induced expenditure increases by $5 billion; increases by $10 billion b) autonomous expenditure decreases by $10 billion; decreases by $5 billion c) equilibrium expenditure increases by $8 billion; increases by $16 billion d) autonomous expenditure increases by $10 billion; increases by $20 billion