A person's consumption possibilities is defined by the budget line because
A) it marks the boundary between what is affordable and unaffordable.
B) it represents the individual's preference for different combinations of goods.
C) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources.
D) all consumers must consume on their budget line.
A
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A wealth tax can be justified because it
A. helps to correct certain (inevitable) problems that arise in the administration of an income tax. B. the higher an individual's wealth, the greater his or her ability to pay, other things - including income - being the same. C. reduces the concentration of wealth, which is desirable socially and politically. D. are payments for benefits that wealth holders receive from government. E. all of these answer options are correct.
Keynes's liquidity preference theory indicates that the demand for money
A) is purely a function of income, and interest rates have no effect on the demand for money. B) is purely a function of interest rates, and income has no effect on the demand for money. C) is a function of both income and interest rates. D) is a function of both government spending and income.
Scott and Tom have dinner together at a new restaurant, and they discover that the portions are huge but taking home leftovers is not allowed. When both decide they are full, Scott forces himself to finish the rest of the food on his plate even though he doesn't really want to, while Tom asks the waiter to remove his plate while it still contains some food. How would an economist describe this behavior?
A. Scott acted rationally, because the food otherwise would have been thrown away. B. Tom acted rationally, maximizing his utility. C. Both Tom and Scott acted rationally. D. Both Tom and Scott acted irrationally.
Which of the following would cause the supply of dollars curve in the United States to shift to the right?
a. Japanese imports become less popular. b. The value of the dollar falls. c. The supply of dollars decreases. d. Japanese imports became more popular.