Assume two people live in the same neighborhood, the same size house and earn identical incomes. Both are unmarried without children. How might one of them actually be poorer than the other?
What will be an ideal response?
Poverty is not measured strictly based on income alone. There may be other factors that make one of them poorer than the other. One might be the amount of human capital that one person has that the other does not, like education or training. Another might be the amount of assets each has or the lack of good health. There are a myriad of reasons why one of them may be poorer than the other even though they make identical incomes.
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Suppose individuals now believe that there will be a future tax cut. This reduction in expected future taxes will cause which of the following to occur in the current period?
A) the LM curve to shift down B) the LM curve to shift up C) the IS curve to shift rightward D) the IS curve to shift leftward E) none of the above
A decrease in the wage rate
A) shifts the firm's demand for labor curve rightward. B) shifts the firm's demand for labor curve leftward. C) leads to a movement along the demand for labor curve but does not shift the curve. D) None of the above answers is correct.
Refer to Figure 13.3. If exchange rates are floating, fiscal policy designed to reduce the federal deficit and the typical Fed response to the change in inflation caused by the fiscal policy would best be represented by a movement from ________ in
panel (a) and a corresponding movement from ________ in panel (b). A) point A to point D; point X to point Y B) point C to point B; point X to point Y C) point D to point A; point Y to point X D) point B to point C; point Y to point X
Individual firms in a perfectly competitive market can
a. purchase all they want at the market price b. sell all they produce at the market price c. earn more profit if they charge a price above the market price d. earn more profit if they charge a price below the market price e. earn no profit in the short run