The federal government's budget includes spending on goods and services, transfer payments, and taxes. (This is also true of state and local government budgets, but our focus for purposes of fiscal policy analysis is mainly the federal budget.)
What will be an ideal response?
Thus we can divide total
government expenditures, or government outlays, into two categories. Total government
outlays include not only government spending on goods and services (G) but also government transfer payments:
Government Outlays = G + TR
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When the demand for a product is more elastic than the supply
A) firms pay the majority of the tax on the product. B) consumers pay the entire tax on the product. C) consumers pay the majority of the tax on the product. D) firms pay the entire tax on the product.
Refer to Figure 7.3. Suppose a firm moves along the isoquant from point a to point b. The rate of substitution for labor with capital is:
A. 2.
B. -2.
C. ½.
D. -½.
Economists assume that consumers behave in a manner consistent with the _______ of utility.
a. maintenance b. minimization c. maximization d. final degree
Some people view cosmetic surgery (c) and facials (f) as perfect substitutes as measured by the utility function U(c,f) = 5c + 10f. What is the marginal utility of cosmetic surgery?
A) MU = 5. B) MU = 10. C) MU = 15. D) None of the above.