Ceteris paribus, an increase in the government budget deficit increases interest rates in the United States and causes a real appreciation of the dollar
Indicate whether the statement is true or false
FALSE
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Suppose gasoline stations operate with identical costs in a perfectly competitive industry. In each of the following cases, explain what happens to an individual gasoline station and what happens to the overall quantity of gasoline sold in the short and long run. Assume that labor is the only variable input in the short run.
a. Last year's tax returns from gasoline station owners show unusually high income for these owners because of the upward trend in prices this past year. So Congress passes a one-time "profits tax" based on these unusually high incomes last year. b. Continue with part (a). After the imposition of the "profits tax" from part (a), Congress has to decide what to do with the revenues. The Texas Congressional delegation persuades the government that running a gasoline station is patriotic but difficult work - and that the Congress should put all the revenues from the "profits tax" into a trust fund which will be used to finance annual Christmas gifts in the form of a $10,000 check for all gasoline station owners from now on.c. Moved by a Hollywood movie on global warming, a teary-eyed senator persuades Congress to impose a $2 per gallon tax on all gasoline sold at the pump.d. After the industry settles into its new long run equilibrium (following the tax increase from (c)), the Congress decides to help out the gas station owners once more by subsidizing their equipment purchases through a tax credit - thereby lowering the rental rate they have to pay on their equipment. (Assume equipment is fixed in the short run, variable in the long run.)e. True or False: Since the short run marginal cost curve measures only costs associated with variable inputs (like labor) and not with fixed inputs (like capital), the short run marginal cost curve in the new long run equilibrium (following the policy in part (d)) is the same as the short run marginal cost curve in the old equilibrium (before the policy in part (d)). Explain. What will be an ideal response?
When the Fed is pursuing contractionary monetary policy it will tend to depreciate the value of the dollar and hence increase net exports, other things equal
a. True b. False Indicate whether the statement is true or false
Economic growth is
a. growth in inflation over time b. growth in real GDP over time c. growth in unemployment over time d. growth in net exports over time
Which of the following examples would likely have the lowest elasticity of demand if the price of the product changed?
a. Ramon spends $5 of his weekly paycheck of $1,500 on yogurt. b. Cynthia spends $200 of her weekly paycheck of $1,000 on clothes. c. Karl spends $50 of his weekly paycheck of $1,200 on music streaming. d. Yuna spends $800 of her weekly paycheck of $2,000 on a HD television.