A budget constraint is:
A. a line that is composed of the additional utility gained from consuming possible combinations of goods and services that a consumer can buy with his or her income.
B. a line that is composed of all the possible combinations of goods and services that a consumer can buy with his or her income.
C. a line that is composed of all the possible combinations of goods and services that maximize a consumer's total utility.
D. a line that is composed of the total utility gained from consuming all possible combinations of goods and services that a consumer can buy with his or her income.
Answer: B
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Which of the following would you expect to increase the equilibrium interest rate?
A) an increase in the budget deficit B) a decrease in the profitability of investment projects firms are considering C) a change from an income tax to a consumption tax D) an increase in the percentage of income after net taxes that households save Figure 21-1
A price floor policy establishes a minimum price for a market, and the policy is said to be binding if the market equilibrium price is less than the floor price. What impact does a binding price floor have on the market outcome?
A) Excess supply B) Excess demand C) Shortage D) No impact, and the market price and quantity equal their equilibrium values
Economists define full employment as the level of employment that results when
a. the economy is in an economic boom. b. the rate of unemployment is zero. c. the rate of unemployment has fallen to its historical low of approximately two percent. d. the rate of unemployment is normal, considering both frictional and structural factors.
The short run is characterized by:
A. plenty of time for firms to either enter or leave the industry. B. increasing but not diminishing returns. C. fixed plant capacity. D. zero fixed costs.