Suppose a government tax cut increases disposable income. If there is no change in the government deficit or surplus, what effect would this tax cut have on the supply of loanable funds and the demand for loanable funds? What will happen to the real
interest rate?
By increasing disposable income, the tax cut will increase saving. The supply curve of loanable funds will shift rightward. The real interest rate will decrease, the quantity of loanable funds will increase, and there will be no change in the demand for loanable funds curve.
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The Acme Company is a perfect competitor in its input markets and its output market. Its average product of labor is at its maximum and equals 30. The marginal revenue product of labor is $300. The price of its output
A) is $0.10. B) is $10. C) is $9,000. D) cannot be determined without more information.
Giving people income through unemployment insurance:
A. allows people to prolong their unemployment until they find a better match. B. reduces seasonal employment because people find good matches, and change jobs less often. C. creates one effect positive on unemployment. D. All of these are true.
Total utility is
A. The additional utility from consuming one more unit of a good. B. How much utility a seller gets from producing a good. C. A function that always falls as a buyer enjoys more units of a good. D. The sum of the marginal utilities from the consumption of good.
The free-rider problem plagues public goods because
A. once public goods are produced it is not possible to exclude anyone from consuming these goods. B. the government can refuse to serve a citizen. C. public goods are not produced by profit-maximizing firms and hence can be produced only at a loss to society. D. the public doesn't care about public goods.