An increase in the price of a loaf of bread will
a. cause the budget constraint to rotate outward
b. reduce the minimum number of loaves any individual consumer can purchase
c. increase the minimum number of loaves any individual consumer can purchase
d. increase the maximum number of loaves any individual consumer can purchase
e. reduce the maximum number of loaves any individual consumer can purchase
E
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Consider a $4 excise tax that has been levied on suppliers of automobile tires. Legislators, in the interest of fairness, change the law so that the tax is evenly split between suppliers and demanders, with each group legally required to pay $2 per tire. In this situation, we can predict that
a. suppliers will be made better off and demanders will be made worse off. b. the change will have no economic effect on suppliers and demanders. c. demanders will "pass back" their share of the tax to the suppliers, so that suppliers continue to pay $4 per tire. d. the economic incidence of the tax will be evenly split between suppliers and demanders.
In the 1960s and 1970s, research funding by the U.S. government and some universities led to revolutionary advances in network computing
These advances in communication and network technology remained largely isolated to governmental and academic use. By the mid-to-late 1990s, the Internet began to be widely adopted with massive increases in productivity (which journalists dubbed the "new economy"). Which of the following is an appropriate description of the mechanism behind this supply shock? A) Since this "new economy" was a new paradigm, the transition from a pre-internet to an internet economy was initially costly. Thus, the AS curve likely shifted to the left and unemployment likely increased in the short-run. B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s. C) A negative output gap would have resulted in the short-run, but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s. D) all of the above E) none of the above
If velocity remains relatively constant, changes in the money supply can have a predictable effect on nominal GDP
a. True b. False Indicate whether the statement is true or false
To answer the next question, use the information in the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5. Change in IncomeChange in ConsumptionChange in SavingsAssumed increase in investment$5.00 $1.25Second round $2.81 All other rounds 8.44 Totals 5.00The marginal propensity to consume is
A. 0.75. B. 0.9. C. 0.5. D. 0.8.