Which combination of fiscal policy actions would most likely offset each other?
A. An increase in taxes, but no change in government purchases
B. A decrease in taxes and an increase in government purchases
C. An increase in taxes and an increase in government purchases
D. A decrease in government purchases, but no change in taxes
Answer: C
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An interior solution to a consumer's utility maximization problem implies _________. (Select all that are true.)
the goods are perfect substitutes consuming more than an optimal amount of at least one good. consuming a positive amount of all goods. spending all income. spending less than full income. the goods are imperfect substitutes consuming a positive amount of one good and zero of the other good.
If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The price elasticity of demand is:
A. –1.5 and is inelastic. B. –1.5 and is elastic. C. –0.67 and is elastic. D. –0.67 and is inelastic.
The classical economic doctrine held that the normal equilibrium position of the economy was one of
a. rising interest rates. b. some unemployment. c. rising prices. d. full employment.
If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to:
A. rise. B. fall. C. stay the same. D. drop to zero.