A permanent tax cut would likely ________ consumption spending ________ than would a tax rebate like the one issued in 2008
A) increase; more
B) increase; less
C) decrease; more
D) decrease; less
Answer: A
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Suppose a market is in equilibrium. If a price floor is set in this market below the equilibrium price, it is likely that:
A) quantity demanded will increase. B) a surplus will arise. C) a shortage will arise. D) the quantity sold will rise. E) the market will remain in equilibrium.
Inelastic demand implies
A) that a one percent increase in price results in a smaller than one percent decrease in quantity demanded. B) that a one percent increase in price results in a larger than one percent decrease in quantity demanded. C) that a one percent cut in price results in a larger than one percent increase in quantity demanded. D) that a one percent decrease or increase in price induces no change in total revenue.
All else held constant, as additional firms enter an industry
A. less output is available at each given price. B. more output is available at each given price. C. the same output is available at each given price. D. output could increase or decrease at each given price.
If the production of a product results in significant external costs, an appropriate government policy might be to
A. subsidize consumers since the good is being under-consumed. B. subsidize the production of the good. C. tax consumers' incomes and thus shift the demand curve to the left. D. tax producers and thus shift the supply curve to the left.