The curve that assumes that there is some tax rate beyond which the supply response is large enough to lead to a decrease in tax revenue for further increases in the tax rate is the
A. Lucas supply curve.
B. Laffer curve.
C. aggregate supply curve.
D. aggregate production function.
Answer: B
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If in the economy, business saving equals $300 billion, household saving equals $10 billion and government saving equals -$200 billion, what is the value of national saving?
A. $210 billion B. $310 billion C. $110 billion D. $10 billion
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
When marginal revenue is equal to marginal cost, the monopolist
A. should increase output to maximize profits. B. will maximize profits or minimize losses. C. will produce where price = ATC.
Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?
A) The demand for digital music players is greater than the supply of digital music players. B) Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price. C) The price of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease. D) The shortage will cause a decrease in the equilibrium price of digital music players.