Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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The government is considering levying a tax on the pollution generated from two electric power plants (Plant A and Plant B)
Plant A is located in a city with a high density of population, and Plant B is located in the rural area with a low density of population. The government should A) levy the same tax per unit of pollution on both plants. B) levy a higher tax per unit of pollution on Plant A because of its higher economic damage. C) levy a higher tax per unit of pollution on Plant B because of its lower economic damage. D) tax only Plant A but not Plant B because Plant B generates less revenue.
The demand for flour is
a. inelastic because there are few substitutes for flour and it represents a large percentage of a consumer's budget b. inelastic because there are many substitutes for flour and it represents a large percentage of a consumer's budget c. inelastic because there are few substitutes for flour and it represents a small percentage of a consumer's budget d. elastic because there are no substitutes for flour and it represents a large percentage of a consumer's budget e. elastic because there are many substitutes for flour and it represents a large percentage of a consumer's budget
Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is __________ for the United States than Canada, so Canada has the ______________ advantage in shoe production.
A. higher; comparative B. lower; comparative C. higher; absolute D. lower; absolute
One piece of evidence that business fluctuations are caused by demand-side changes would be that
a. monetary and fiscal policy will move inversely. b. interest rates and budget deficits will move inversely. c. unemployment and inflation will move inversely. d. unemployment and budget deficits will move inversely.