Macroland produces dishes and glassware. Before trade, a set of dishes sells for $100 and a set of glasses sells for $50. When Macroland opens to trade, foreign demand for domestically produced china is strong, raising the price of a set of dishes to $125. But foreign competition reduces the demand for domestically produced glasses, so they now sell for $25 a set. Assuming workers cannot move between industries, the wages of workers producing dishes will ________ and the wages of workers producing glasses will ________.
A. decrease; increase
B. increase; increase
C. increase; decrease
D. increase; not change
Answer: C
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If aggregate demand increases, thereby leading to an increase in real GDP and inflation, there is
A) a leftward shift in the short-run Phillips curve. B) a movement downward along the short-run Phillips curve. C) a movement upward along the short-run Phillips curve. D) a rightward shift in the short-run Phillips curve. E) neither a movement along nor a shift in the short-run Phillips curve.
Throughout this discussion of taxes, there has been repeated mention of the need for progressivity in the tax system. Why is this an important goal for tax systems in most societies?
What will be an ideal response?
Because it is based on the demand for products, the demand for labor is called
a. a substitution demand b. a complementary demand c. an income demand d. a derived demand e. a marginal demand
When a tax is levied on sellers of tea,
a. the well-being of both sellers and buyers of tea is unaffected. b. sellers of tea are made worse off, and the well-being of buyers is unaffected. c. sellers of tea are made worse off, and buyers of tea are made better off. d. both sellers and buyers of tea are made worse off.