If the government were to impose a lump-sum tax on a monopolist, what is likely to happen to the quantity produced of a commodity and the price charged relative to the situation where there is no lump-sum tax imposed?
A) No change in price, quantity produced, or profit would occur.
B) The price would fall and the quantity produced would fall
C) No change in price or quantity produced, only a reduction in profit
D) The price would fall but the quantity produced would rise
Answer: C
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Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?
A) the monetarist model B) the new classical model C) the new Keynesian model D) the real business cycle model
The Federal Reserve pursued an expansionary monetary policy during 1964 in order to
A) pull the United States out of a deep recession. B) counteract the effects of a deep cut in federal income taxes. C) keep interest rates from rising. D) bring down the inflation rate.
Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity
What will be an ideal response?
Efficiency wage theory suggests that firms may hold wages above the market clearing rate because
A. unspoken agreements between workers and firms are in place. B. they believe that the productivity of workers increases with the wage rate. C. long-term contracts fix wage rates for a period of one to three years. D. it is required by law that they do so.