Refer to the graph shown. Assume the economy is in short-run equilibrium at point A below potential output. The government opts for an expansionary fiscal policy in an attempt to pull the economy out of the recession. Not considering shifts in aggregate supply, an economist with a functional finance view, who also believes in a full crowding out effect, would conclude that the economy will end up at point:
A. A.
B. B.
C. C.
D. D.
Answer: A
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A bond that pays a yearly interest rate of $100 is for sale. The interest rate was 10 percent and now is 5 percent. The price of the bond has
A) decreased from $1000 to $500. B) increased from $1000 to $2000. C) decreased from $2000 to $1000. D) increased from $500 to $2000.
A firm's horizontal dimension refers to
A) its size in its primary market. B) its size in all markets in which is competes. C) the level of supply chain integration the firm undertakes. D) the number of stages in the production process that are upstream from the stages the firm undertakes.
A regressive tax
a. taxes individuals with higher incomes at a higher rate than individuals with lower incomes. b. takes a similar percentage of income at all income levels. c. takes a higher percentage of the income of those with lower incomes than for those with higher incomes. d. taxes savings at a higher rate than consumption.
Tony's Taco Truck has an average variable cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (tacos). We can conclude that the average variable cost of producing 51 tacos is a. higher than $1.50
b. lower than $1.50. c. equal to $1.50 d. either higher or lower than $1.50 depending on the direction of the marginal cost curve.