Suppose a tax is imposed on baseball bats. In which of the following cases will the tax cause the equilibrium quantity of baseball bats to shrink by the smallest amount?
a. The response of buyers to a change in the price of baseball bats is strong, and the response of sellers to a change in the price of baseball bats is weak.
b. The response of sellers to a change in the price of baseball bats is strong, and the response of buyers to a change in the price of baseball bats is weak.
c. The response of buyers and sellers to a change in the price of baseball bats is strong.
d. The response of buyers and sellers to a change in the price of baseball bats is weak.
d
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A decrease in the demand for loanable funds and a leftward shift of the demand for loanable funds curve results from
A) an increase in the real interest rate. B) technological improvements. C) tax cuts. D) decreases in the expected profit.
The “law” of diminishing returns
A. is deduced from the basic biochemical relationship of agricultural theory. B. was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. C. is based on regular observations of input-output relationships over the last two centuries. D. is borrowed from physical laws related to conversion of matter and energy.
In July 2011, $1 was worth 45 Indian rupees and in July 2012, $1 was worth 55 Indian rupees. We can therefore conclude that
A) the Indian rupee depreciated. B) the Indian rupee appreciated. C) the U.S. dollar has depreciated. D) the value of the U.S. dollar has fluctuated.
The idea that higher prices reduce the purchasing power of financial assets and lead to less consumption is known as the:
a. real balances effect. b. interest rate effect. c. foreign purchases effect. d. income effect. e. aggregate demand effect.