Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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One source of structural unemployment is ________
A) the seasonal character of production in some industries, e.g. agriculture in Alaska during winter months B) falling sales in an economic downturn C) wage rigidity D) high search costs
The introduction of a tax in a perfectly competitive marketplace that is originally in equilibrium will lower total surplus.
Answer the following statement true (T) or false (F)
In 2014, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?
The economy moves down a stationary aggregate demand curve when the Fed:
A. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function. B. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. C. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. D. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function.