The average tax rate is defined as
A) total tax due/change in taxable income.
B) total tax due/total taxable income.
C) change in taxes due/change in taxable income.
D) change in taxes due/total taxable income.
B
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Suppose there is an oil supply shock to the U.S. economy due to an embargo by major oil producing nations. According to the real business cycle theory, the supply shock will, other things being equal
A) cause economy-wide deflation. B) cause real Gross Domestic Product (GDP) to decline both in the short run and in the long run. C) push the economy into an expansionary phase of the business cycle. D) push real Gross Domestic Product (GDP) upward in the short run but downward in the long run.
The reference base period for the CPI is
A) currently 1982 to 1984. B) currently 1913. C) whatever the political party that is in control of Congress decides. D) currently 2005. E) the previous year.
Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25. In this situation, the elasticity of demand, calculated using the average method, is
A) 3. B) 1. C) 0.33. D) 1.33.
Last year a firm made 1,000 units of its product available at a price of $5 per unit. This year the firm will still make 1,000 units available, but only if the price is $7 per unit. What is most likely to have happened?
a. Supply has increased b. Supply has decreased c. Demand has decreased d. Quantity demanded has increased e. Quantity supplied has increased