Distorting taxes always create excess burdens.
Answer the following statement true (T) or false (F)
False
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An individual's labor supply curve will have a
A) positive slope if the income effect exceeds the substitution effect. B) negative slope if the substitution effect exceeds the income effect. C) positive slope if the substitution effect exceeds the income effect. D) negative slope regardless of whether the substitution effect or income effect is larger.
An expansionary monetary policy, all else equal, will:
A) depreciate the domestic currency. B) appreciate the domestic currency. C) all of the above. D) none of the above.
The owner of a perfectly competitive firm is currently earning an economic profit of zero. This owner
A) should shut down since profits of zero are not good. B) should raise the price of the product to increase profits. C) is covering all of his fixed costs. D) will continue producing in the short-run but will shut down in the long run if profits do not increase.
In a flexible exchange rate regime, an increase in the expected future exchange rate will cause
A) the IP curve to shift to the left/up. B) the IP curve to shift to the right/down. C) a movement along the IP curve. D) neither a shift nor movement along the IP curve.