The federal government's earned-income tax credit
a. provides support only for elderly and disabled poor
b. represents a type of in-kind transfer program
c. provides food assistance to the working poor
d. reduces taxes if the poor buy housing
e. offers an income tax refund to the working poor greater than the taxes they paid
E
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If the prices of both goods increase by 10 percent, the budget line
A. shifts to the right in parallel fashion. B. shifts to the left in parallel fashion. C. is unaffected since only relative price changes matter. D. pivots on the axis of the more expensive good.
Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:
a. the demand for new homes has risen. b. the law of demand has been violated. c. new firms have entered the construction industry. d. construction firms must be facing higher costs.
Product innovation:
A. presents a problem for those calculating the CPI because they use a fixed basket of goods. B. is accurately reflected in the basket of goods. C. doesn’t cause the CPI to be overestimated. D. is not an issue for the CPI since it uses a fixed basket of goods and services.
A firm in monopolistic competition can determine what price to charge for its product because of
A) barriers to entry. B) economies of scale. C) product differentiation. D) the fact there are many buyers.