One objection to the notion of Ricardian Equivalence is that ________
A) households will recognize that a tax cut today will only lead to a tax increase in the future
B) individuals are short-sighted in their spending decisions
C) borrowing constraints have largely been eliminated due to financial innovation in the provisioning of consumer credit
D) households typically save most of the monies received from a tax cut
B
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Gwen’s decision to buy a new television instead of a bicycle for the same price
A. means that opportunity cost is zero since both cost the same amount. B. would not have involved trade-off and opportunity cost if Gwen had decided to put the money in a bank CD instead. C. would not imply a trade-off because of scarcity if Gwen were a multimillionaire. D. means that the opportunity cost to Gwen is the bicycle that she has given up.
If production function q1 = f(L, K), which of the following production functions illustrates neutral technical progress?
A) q2 = f(1.25L, 1.25K) B) q2 = f(1.25L, K) C) q2 = f(L, 1.25K) D) q2 = 1.25 * f(L, K)
Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears
This best demonstrates the concept of A) division of labor. B) microeconomics. C) comparative advantage. D) absolute advantage.
Ronald Coase's analysis of externalities emphasizes the importance of:
a. command-and-control regulations. b. effluent taxes. c. property rights. d. international sovereignty.