Use the following graph to answer the next question.
The relationship between the average tax rate and the tax base in a proportional tax would be represented by
A. curve A.
B. curve B.
C. curve C.
D. none of the curves.
Answer: B
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The Latin phrase ceteris paribus means that when a relationship between two variables is being studied
A) neither of those two variables is allowed to change. B) both are treated as unpredictable. C) we recognize that some factors are unknown. D) all other variables are held fixed.
If some monopolistically competitive firms exit their market after suffering short-run losses, the demand curves of remaining firms will shift to the right
Indicate whether the statement is true or false
Do you agree that currency depreciation will lead to an increase in the debt burden of the companies that borrow in foreign currency? Explain with an example.
What will be an ideal response?
A fiscal contraction will tend to cause which of the following to occur?
A) a reduction in the interest rate and a reduction in investment B) a reduction in the interest rate and an upward shift in the LM curve C) a reduction in the interest rate and an ambiguous effect on investment D) no change in output if the Fed simultaneously pursues contractionary monetary policy