Suppose all people have the same age-earnings profile and the percent of the population in each age category is the same. The distribution of income at any point in time will be
A) equal because all have the same profile.
B) equal because incomes and wealth levels must then be the same.
C) unequal because other sources of income will differ.
D) unequal because incomes differ by age.
Answer: D
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Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run? A) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease. B) The unemployment rate will increase, real GDP will increase and the price level will increase. C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase. D) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Suppose the Brazilian government subsidizes the export of coffee by $0.42 per pound
Which of the following would be an outcome of this subsidy? A) Brazilian producers experience an increase in producer surplus. B) Brazilian consumers experience an increase in consumer surplus. C) Producers from the rest of the world experience a gain in producer surplus. D) Brazilian coffee exports would decrease.
According to the quantity theory of money, inflation results when excessive paper money is in circulation
Indicate whether the statement is true or false
A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded
a. True b. False Indicate whether the statement is true or false