Suppose a retail store was offering 10% off list prices on all goods. The benefit of the 10% savings is:
A. unrelated to the list price of the good.
B. zero since costs and benefits shouldn't be measured proportionally.
C. positively related to the list price of the good.
D. negatively related to the list price of the good.
Answer: C
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A virtue of income taxes over sales taxes is that _____
a. they are more comprehensive b. they are more difficult to avoid c. the excess burden of an income tax system is far smaller d. progression can be built into the system
Suppose a recession in Europe reduces U.S. net exports at every price level. Which of the following would you expect to occur in the U.S. as a result of this change?
a. In the short run, unemployment will increase and inflation will fall. b. In the short run, unemployment will increase and inflation will rise. c. In the short run, unemployment will decrease and inflation will rise. d. In the short run, unemployment will decrease and inflation will fall.
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.
Potential GDP in the United States
A) declines over time. B) changes over a given business cycle. C) does not change over time. D) grows as the economy grows.