When the tax rate on wages falls (so that the take-home wage or effective wage increases), the budget line
A. shifts out, parallel to the old budget line.
B. shifts in, parallel to the old budget line.
C. rotates out along the leisure axis.
D. rotates in along the leisure axis.
E. rotates out along the consumption axis.
Answer: E
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A fall in the price of a competing product will produce an outward shift in the demand curve for most products.
Answer the following statement true (T) or false (F)
In the short run, an increase in the money stock growth rate
a. moves the economy up the short-run Phillips curve. b. moves the economy down the short-run Phillips curve. c. shifts the short-run Phillips curve to the right. d. results in a decline in the natural rate of unemployment and a rise in the inflation rate. e. both b and d are correct.
If $1 U.S. is worth $30 Canadian, then a good that sells for $5,000 in the United States should sell for _____ Canadian in Canada
a. $120,000 b. $50,000 c. $150,000 d. $180,000
Empirically, there is a close positive relationship between domestic savings and investment. This is consistent with what we should expect to observe in
a. a closed economy. b. the Mundell-Flemming model with perfect capital mobility. c. the Mundell-Flemming model with perfect capital mobility and flexible exchange rates. d. the Mundell-Flemming model with perfect capital mobility and fixed exchange rates. e. none of the above.