Disposable income can be defined as national product
A. minus federal and state taxes.
B. minus taxes plus transfers.
C. minus indirect taxes.
D. plus taxes plus transfers.
Answer: B
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The substitution effect can be defined as:
A. the change in consumption that results from a change in the relative price of goods. B. the change in consumption that results from increased effective wealth due to lower prices. C. the change in consumption that results from increased effective wealth due to getting a raise. D. the change in income that results from increased effective consumption due to lower prices
Many economists believe that stabilization policy should be limited in scope until
A. Keynesians and monetarists agree on policy. B. inflation is brought under control. C. the economy is operating near capacity. D. forecasting becomes more reliable.
Which of the following resulted from the Smoot-Hawley trade bill of 1930?
A) The stock market began a steady recovery from the crash of October 1929. B) Imports decreased, while exports increased, resulting in an overall increase in GDP and tariff revenues. C) The higher tariff rates increased federal revenues and led to a balanced budget the year after passage of the bill. D) The unemployment rate, which stood at less than 8 percent when the bill was passed, soon soared to double-digit levels.
A rational person:
A. makes choices based on total benefits and total costs. B. undertakes activities until the net benefits become less than zero. C. considers the financial benefits and financial costs of making a choice. D. makes choices based on added benefits and added costs.