Which of the following best defines disposable income?
A. Income received by households less personal taxes.
B. The before-tax income received by households.
C. All income earned by resource suppliers for their current contributions to production.
D. The market value of the annual output net of consumption of fixed capital.
A. Income received by households less personal taxes
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Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Because firms face increasing marginal costs to reduce pollution, the demand curve for pollution permits will be:
A. perfectly elastic. B. perfectly inelastic. C. downward sloping. D. upward sloping.
Which of the following will increase the money supply?
A) an increase in the discount rate (relative to the federal funds rate) B) a decrease in the required reserve ratio C) an open market sale by the Fed D) a and c E) b and c
In a given year the nominal growth rate is 5% with inflation and population growth rates of 1.2% and 3.8% respectively, then real growth rate of GDP per capita is:
A. 3.8%. B. 5.0 %. C. 1.2%. D. 0.0 %.
When fixed costs are ignored because they are irrelevant to a business's production decision, they are called
a. explicit costs. b. implicit costs. c. sunk costs. d. opportunity costs.