Use the following graph to answer the next question.
What combination would most likely cause a shift from AD1 to AD2?
A. An increase in taxes and an increase in government purchases
B. An increase in taxes and no change in government purchases
C. A decrease in taxes and an increase in government purchases
D. A decrease in taxes and a decrease in government purchases
Answer: C
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Which of the following is an incorrect observation? a. Import tariffs benefit domestic producers and the government, but harms domestic consumers
b. Gains from trade in terms of world output are reduced by export subsidies. c. The overall domestic employment effects of a tariff imposition are likely to be positive. d. If the imposition of a tariff leads to retaliatory tariffs by other countries, domestic employment outside the industry gaining the tariff protection would likely suffer.
Which of the following is likely to have the most price elastic demand?
a. lattés b. doctor's visits c. eggs d. natural gas
Assume Diana buys computers in a competitive market. It follows that
a. Diana has a limited number of sellers to turn to when she buys a computer. b. Diana will find herself negotiating with sellers whenever she buys a computer. c. if Diana buys a large number of computers, the price of computers will rise noticeably. d. None of the above is correct.
If this is an open economy, the price of a car will be ________.
A. $10,000/car B. $8,000/car C. $14,000/car D. $6,000/car