Suppose the economy experiences an inflationary gap. Policymakers who believe that government is too big would favor which of the following policies to close the gap?
A) reduction in government spending
B) increases in income tax rates
C) increases in corporate tax rates
D) increases in interest rates
Ans: A) reduction in government spending
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Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products
a. True b. False Indicate whether the statement is true or false
The marginal productivity principle does not
A. assign higher prices to scarcer resources. B. create incentives for firms to discriminate.. C. guide firms to use society’s resources efficiently. D. distribute incomes unequally among society.
A key step in using instrument variable methods is to
A) find one or more exogenous variables that influence your dependent variable. B) decrease the number of lags in the regression equation. C) conduct interviews to determine how accurate your data really is. D) run the regression on two different computers to see if the results differ. E) eliminate the dependent variable.
By requiring car producers to install emission control devices on cars, the government forces these producers to internalize some of the external costs of auto pollution. This will lead to the equilibrium price of cars:
A. Decreasing and the quantity increasing B. Decreasing and the quantity decreasing C. Increasing and the quantity increasing D. Increasing and the quantity decreasing