The primary value of real GDP is its ability to measure year-to-year changes in
What will be an ideal response?
real output.
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Suppose x is an inferior good. Then we will overestimate the deadweight loss from taxes on consumption good x if we use the uncompensated demand curve rather than the marginal willingness to pay (or compensated demand) curve.
Answer the following statement true (T) or false (F)
Define what is meant by the period known as the short run
What will be an ideal response?
An advantage of a negative income tax is _____
a. it is more paternalistic than in-kind transfer payments b. it could replace many existing transfer programs c. it eliminates the incentive to substitute into leisure d. it has no excess burden
Ashley puts money in a savings account at her bank earning 2 percent interest. One year later she takes her money out and notes that prices rose 3 percent. Ashley earned a a. real interest rate of -1 percent due to inflation
b. real interest rate of 1 percent due to inflation. c. nominal interest rate of -1 percent due to inflation. d. nominal interest rate of 1 percent due to inflation.