Kaitlyn purchased one share of Northwest Energy stock for $200; one year later she sold that share for $400 . The inflation rate over the year was 50 percent. The tax rate on nominal capital gains is 50 percent. What was the tax on Kaitlyn's capital gain?
a. $50
b. $75
c. $100
d. $200
c
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Suppose at the current level of labor used, MRP = $100 and MFC = $150. To maximize profits, the firm should
A) hire more labor. B) reduce the level of labor. C) maintain the current level of labor. D) expand production.
Because of recent corporate downsizing, Chuck loses his job. The most likely effect on his consumption function is a(n)
a. movement downward along the function. b. shift upward of the function. c. shift downward of the function. d. increase in consumption expenditures.
If Good X has social demand that is less than market demand, then Good X must be a
A. Good suffering from the free-rider problem. B. Good with an external benefit. C. Good with an external cost. D. Public good.
Which of the following statements is true?
A. According to the permanent income hypothesis, a person who received a windfall of say $100,000 would spend most of it that year. B. As disposable income rises, induced consumption falls. C. The minimum amount that people will spend if disposable income is zero is called induced consumption. D. A rapid increase in the prices of residential housing results in an increase in consumption due to the wealth effect.