The disposable income component of aggregate demand is equal to:
a. income before taxes.
b. income after taxes.
c. operating income.
d. investment income.
b. income after taxes.
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The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?
A) a decrease in the price of microwave popcorn B) an increase in the price of microwave popcorn C) an increase in income D) a decrease in income
Based on what we know about asset price formation, what steps can a government use to restrict the formation of an asset price bubble?
A) Lower interest rates in order to discourage savings and investment B) Loosen lending requirements for banks, which encourages investors to buy bank stock rather than the "bubbling" asset C) Increase the money supply D) Raise interest rates in order to increase the costs of financing asset purchases
When the American League instituted designated batters (that is, pitchers were exempt from batting), the shadow prices of throwing bean-balls (a pitch aimed at the batter's head):
A. did not change. B. fell. C. rose. D. disappeared.
A firm that generates pollution is illustrated in Figure 9.7. If the government imposes a pollution tax equal to P2 and the firm chooses abatement level A3:
A. the marginal cost of abating is greater than the marginal benefit of abating. B. the marginal benefit of abating is greater than the marginal cost of abating. C. the firm is choosing optimally. D. the firm is in violation of environmental protection laws.