How do changes in income tax policies affect aggregate demand?
A) Higher taxes increase corporate investment and aggregate demand.
B) Higher taxes reduce disposable income, consumption, and aggregate demand.
C) Higher taxes increase aggregate supply and thus increase aggregate demand as well.
D) Higher taxes increase disposable income, consumption, and aggregate demand.
B
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What is a black market and how does it influence the market for rental housing if a rent ceiling creates a housing shortage? What determines the level of the black market rent?
What will be an ideal response?
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is considering setting up his business as a sole proprietorship. What is one disadvantage to Jeremy of setting up his business as a sole proprietorship?
A) As a sole proprietor, Jeremy would face unlimited liability. B) As a sole proprietor, Jeremy would be subject to significant rules and regulations. C) As a sole proprietor, Jeremy would be taxed twice. D) As a sole proprietor, Jeremy would not have control of the business.
In the absence of a financial system, the two-period model without taxes predicts that
A) consumption is more volatile that output. B) consumption is as volatile as output. C) consumption is less volatile than output. D) We do not know.
Which of the following is an example of a public good?
A. A weather warning system. B. A television set. C. A sofa. D. A bottle of soda.