Ignoring any supply-side effects, to close an inflationary gap of $100 billion with a government expenditure multiplier of 5, the government could
A) decrease government expenditure on goods and services by $20 billion.
B) decrease government expenditure on goods and services by $100 billion.
C) lower taxes by $100 billion.
D) increase government expenditure on goods and services by $20 billion.
E) lower taxes by more than $20 billion.
A
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Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in
A) a surplus of electricity in the electricity market. B) an increase in the price of electricity to $.25 per kilowatt hour. C) an increase in producer surplus. D) a deadweight loss.
What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?
What will be an ideal response?
An increase in the quantity demanded of a good is most often due to:
a. current prices. b. higher prices. c. higher income. d. lower prices. e. technological change.
Under a progressive tax system:
a. the average tax rate increases with increases in real GDP. b. the average tax rate remains constant with changes in real GDP. c. the average tax rate falls with increases in real GDP. d. government tax receipts increase when the economy is in a recession. e. government tax receipts decrease when the economy is expanding.