Income taxes create a wedge between the wage rate paid by ________ and received by workers and thereby ________ employment and ________ potential GDP
A) firms; raise; decrease
B) households; lower; decrease
C) firms; lower; decrease
D) firms; lower; increase
E) firms; raise; increase
C
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At full employment, actual ________ equals ________
A) real GDP; potential GDP B) real GDP; nominal GDP C) unemployment; zero D) potential GDP; nominal GDP E) nominal GDP; potential GDP
Automobiles and many other products are differentiated. As a result
A) consumers of automobiles have difficulty deciding what type of imported automobile to buy. B) we see countries specializing completely in the production of automobiles. C) different countries may each have a comparative advantage in producing different types of automobiles. D) the quality of imported automobiles is less than it could be.
If a corporation begins to suffer large losses, then the default risk on the corporate bond will
A) increase and the bond's return will become more uncertain, meaning the expected return on the corporate bond will fall. B) increase and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. C) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will fall. D) decrease and the bond's return will become less uncertain, meaning the expected return on the corporate bond will rise.
If some consumers think that two detergents have differing qualities, such as brand-name vs. private label detergents, wheres other consumers know that the detergents are identical, then the detergent producer can
A) reduce its costs. B) engage in a special type of price discrimination. C) avoid moral hazard. D) None of the above.