The Earned Income Tax Credit
a. tends to increase income inequality.
b. is a program that provides additional income to workers with above-average incomes.
c. tends to reduce income inequality.
d. is both a and b.
C
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The equilibrium in the prisoner's dilemma is a dominant strategy Nash equilibrium
Indicate whether the statement is true or false
Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.50, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). If an increase of $1,000 billion aggregate demand can restore full employment, the government should:
a. increase spending by $250 billion. b. decrease spending by $500 billion. c. increase spending by $1,000 billion. d. increase spending by $500 billion.
"The customer is always right" explains
a. the higher wages paid to members of a union. b. compensating differentials. c. persistent wage discrimination based on consumer preferences. d. All of the above are correct.
The concept of Nash Equilibrium:
A. has wide applicability. B. is limited in its applicability to economic behavior because firms do not follow their dominant strategies. C. is limited in its applicability to economic behavior because firms generally follow their dominant strategies. D. has been disproven by modern economists.