Deflation is an overall:
A. decline in prices in the economy.
B. rise in prices in the economy.
C. decline in prices in the economy, excluding those with historically volatile price changes.
D. rise in prices in the economy, excluding those with historically volatile price changes.
Answer: A
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Suppose the tax amount on the first $10,000 income is $0; $2000 on the next $20,000; $4000 on the next $20,000; $6000 on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $30,000 and Family B has income of $80,000. What
is the marginal and average tax rate for each family? A) Family A: marginal—10 percent; average—6.7 percent; Family B: marginal—30 percent; average—15 percent. B) Family A: marginal—10 percent; average—20 percent; Family B: marginal—30 percent; average—23 percent. C) Family A: marginal—10 percent; average—10 percent; Family B: marginal—40 percent; average—40 percent. D) Family A: marginal—10 percent; average—15 percent; Family B: marginal—40 percent; average—20 percent.
A production or consumption quota that can be bought or sold is called:
A. a buyers' or sellers' quota. B. a tax. C. a tradable allowance. D. a subsidy.
Exhibit 17-4 Short-run and long-run Phillips curves
Suppose the economy in Exhibit 17-4 is at point E1, and the Fed increases the money supply. If people have adaptive expectations, then the economy will move:
A. to point A in the short run and point B in the long run. B. directly to point B. C. to point C in the short run and point D in the long run. D. directly to point D.
If prices are held below the equilibrium price:
A) there exists a surplus in the market. B) there exists a shortage in the market. C) social surplus is maximized. D) all firms earn positive economic profits.