President Obama has discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes will affect the aggregate demand curve
What will be an ideal response?
Raising the income tax decreases the amount of disposable income available to those households. Lower disposable income decreases consumption at every price level. The result is a shift in the aggregate demand curve to the left.
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Exit of a firm refers to:
A) a short-run decision by a firm to not produce anything. B) a long-run decision by a firm to leave the market. C) a refusal to work organized by a group of employees at the firm. D) an exclusion of employees of a firm from their place of work until certain terms are agreed upon by them.
Which of the following decreases in labor demand is due to a change in product demand?
A. An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers. B. A decline in productivity in retailing decreases the demand for retail sales workers. C. The widespread availability of news on the web reduces the demand for newspaper workers. D. An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders.
Proposals for bilateral reduction of tariffs in the U.S. and France have been developed through
A. CAFTA. B. NAFTA. C. UNESCO. D. GATT.
Suppose that investment is very responsive to interest rates, so that even a small change in interest rates has a substantial effect on investment. In this case, expansionary monetary policy that results in a modest drop in interest rates will:
A. increase output only slightly. B. not increase output. C. decrease output sharply. D. increase output significantly.