Which of the following is not an argument made by those who oppose reforming the tax laws to encourage saving?
a. A public budget surplus can raise national saving.
b. The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving.
c. Low-income households save a larger fraction of their income than high-income households.
d. Tax cuts might cause a budget deficit.
c
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If a consumer is relatively insensitive to changes in the price of a good, then the consumer's demand for the good is
A) elastic. B) unit elastic. C) inelastic. D) perfectly elastic.
Many wines are priced high in order to
a. Indicate low quality b. Indicate high quality c. Indicate a bargain brand d. None of the above
When economists assume that people act rationally, it means they: a. make decisions based on complete and accurate information
b. make decisions that will not be regretted later on. c. make decisions based on what they believe is best for themselves using available information. d. make decisions based solely on what is best for society.
A measure of sensitivity or responsiveness to changes in price or income is called
a. elasticity b. technology c. supply and demand d. social pressure e. kickback