An economy is in the midst of a recession. An example of a government policy aimed at moving the economy back to potential GDP is:
a) an increase in taxes.
b) an increase in government spending on infrastructure improvements.
c) an increase in the poverty tax.
d) a decrease in unemployment benefits.
Ans: b) an increase in government spending on infrastructure improvements.
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If the government increases unemployment benefits, then the labor
A) demand curve shifts rightward. B) demand curve shifts leftward. C) supply curve shifts rightward. D) supply curve shifts leftward. E) Both answers B and D are correct.
For an individual who consumes only two goods, x and y, the opportunity cost of consuming one more unit of x in terms of how much y must be given up is reflected by:
a. the individual's marginal rate of substitution. b. the market prices of x and y. c. the slope of the individual's indifference curve. d. none of the above.
Suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal, the
a. smaller is the response of quantity supplied to the tax. b. larger is the tax burden on sellers relative to the tax burden on buyers. c. larger is the deadweight loss of the tax. d. All of the above are correct.
If the exchange rate rises, which of the following falls in the open-economy macroeconomic model?
a. desired net exports and desired net capital outflow b. desired net exports but not desired net capital outflow c. desired net capital outflow but not desired net exports d. neither desired net exports nor desired net capital outflow