Which of the following is a normative economic statement?
A) An increase in corporate income taxes will cause the unemployment rate to increase.
B) The costs of medical care are increasing faster than the incomes of U.S. citizens.
C) Teenage unemployment is over 12 percent today.
D) Teenage unemployment is too high for the United States.
Answer: D
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If the marginal propensity to consume (MPC) is 0.75 and there is an increase in planned investment spending of $0.5 trillion, then saving will
A) increase by $0.25 trillion. B) increase by $0.5 trillion. C) increase by $1 trillion. D) remain unchanged.
Which of the following is not an advantage of starting a new business as a proprietorship?
A) A proprietorship has few government rules and regulations to comply with. B) The owner has complete control over the business. C) Business profits are only taxed once, not twice. D) A proprietorship can easily attain additional funding.
How can a corporation's board of directors and its managers try to reduce the principal-agent problem?
What will be an ideal response?
The substitution effect isolates the change in the consumption of a good caused by:
A. the change in consumer preferences. B. the change in the market rate of substitution. C. the lower "real" income. D. None of the statements is correct.