Answer the following statement true (T) or false (F)
1) An increase in demand accompanied by an increase in supply will increase the equilibrium
quantity, but the effect on equilibrium price will be indeterminate.
2) A government subsidy per unit of output increases supply.
3) Consumers buy more of normal goods as their incomes rise.
4) Toothpaste and toothbrushes are substitute goods.
1) T
2) T
3) T
4) F
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If a nation repaid its debts by raising taxes, the main effect would be to:
a. Create a wildly inflationary environment. b. Contract the economy due to the decrease in the monetary base. c. Expand the economy due to the increase in the monetary base. d. Redistribute income if the debt was internally held and transfer spending abroad if it was externally held.
What effect have Medicare subsidies had on the consumption of medical services?
A) The consumption of medical services has been unaffected, because people don't consider the financial cost when seeking services related to their health. B) The consumption of medical services has been unaffected, because government restrictions have prevented patients from seeking a level of care above and beyond what they would choose if they had to pay for medical treatment out of pocket. C) The consumption of medical services has increased because Medicare subsidies give people the incentive to seek more care than they would otherwise. D) The effect cannot be measured because it is difficult to quantify the amount of resources devoted to our health care system.
If Thelma's willingness to sell her homemade fudge is $4, then at which of the following prices would Thelma sell her fudge?
A. $2 B. $3.99 C. $4.01 D. Thelma would not sell her fudge at any of these prices.
Corporate income taxes
a. make recessions and inflationary episodes more severe b. make recessions and inflationary episodes less severe c. make recessions more severe and inflationary episodes less severe d. make recessions less severe and inflationary episodes more severe e. have no effect on the severity of recessions and inflationary episodes