As the MPC increases, the absolute value of the tax multiplier increases.
Answer the following statement true (T) or false (F)
True
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A price ceiling in a perfectly competitive market
a. creates more harm for sellers than gain for buyers b. creates more harm for buyers than gain for sellers c. is effective only it if is set above the equilibrium price d. can turn an inefficient outcome into an efficient outcome e. is a Pareto improvement
Which of the following goods is given in the textbook as an example of a good whose price is subject to volume discounts?
A. Electricity B. Pizza C. Gasoline D. Yogurt
In a duopoly, one firm's low-price guarantee:
A. eliminates the other firm's incentive to undercut the first firm's price. B. encourages the other firm to cut its prices. C. guarantees that consumers will pay the lowest price possible. D. is ineffective because firms always have an incentive to break their agreements.
Answer the following questions true (T) or false (F)
1. The short-run aggregate supply curve is vertical. 2. When potential GDP increases, short-run aggregate supply also increases, but long-run aggregate supply does not change. 3. An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.