Taxes on interest earned from savings are less inefficient
A. the less savings behavior responds to increases in the tax rate.
B. the more savings behavior responds to increases in the interest rate.
C. the less willing individuals are to substitute consumption today for consumption in the future.
D. Both (a) and (b)
E. Both (b) and (c)
F. Both (a) and (c)
G. None of the above
H. All of the above
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. In the long run, a competitive firm that experiences decreasing returns must earn negative profits after all factor shares are paid out. 2. Factors that are supplied relatively inelastically earn more rents than those supplied more elastically. 3. Both the competitive firm's demand curve for labor and the monopoly firm's demand curve for labor always slope downwards. 4. When production is subject to increasing returns to scale profit will be positive. 5. If demand for output rises, producers' surplus increases more for factors with elastic supply curves than for other factors.
________ in the United States ________ in most European countries
A) GDP per hour; is greater than GDP per hour B) Average weekly hours; are greater than average weekly hours C) The Okun Gap; is equal to the Okun Gap D) The Lucas Wedge; is greater than the Lucas Wedge E) Both A and B are true.
The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy is at Point A, a triple intersection. Here, the FE curve is steeper than the LM curve.
If monetary authority is unable to sterilize, output will end up
A. at Y0. B. to the left of Y1. C. to the right of Y1. D. at Y1.
Suppose that Canada can produce 15 units of timber or 3 units of grain. Suppose that Mexico can produce 6 units of timber or 2 units of grain. Which of the following is CORRECT?
A) Mexico has a comparative advantage in grain production. B) Mexico has an absolute advantage in timber production. C) Canada has a comparative advantage in grain production. D) The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.