Tax increases on business income decrease aggregate demand by decreasing
A) business investment spending.
B) consumption spending.
C) government spending.
D) wage rates.
Answer: A
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List the various arguments against free trade
What will be an ideal response?
The production function is Q = K.4 L.6. The marginal rate of technical substitution is:
A. K-1 L-1. B. 3/2 K L-1. C. 3/2 K-1 L. D. K.6 L-.4.
A decrease in firm 2's marginal cost will cause:
A. a downward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity. B. a downward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity. C. an upward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity. D. an upward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.
The input-substitution effect of an increase in the wage comes about because higher wages:
A. increase production costs, and final good prices will rise, reducing the quantity demanded of the product. B. increase production costs, and final good prices will rise, increasing the quantity demanded of the product. C. make labor less expensive as an input, leading firms to switch to labor as an input. D. make labor more expensive as an input, leading firms to switch to other inputs.