Graphically, consumer surplus is the area below the demand curve and above the price
a. True
b. False
Indicate whether the statement is true or false
True
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If the United States government lowers the income taxes on the wealthiest Americans, while decreasing welfare payments to the poorest Americans, the result will likely be an _____ in efficiency and a ________ in equality in the United States.
Fill in the blank(s) with the appropriate word(s).
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
A. 1. B. 0. C. the interest rate. D. the marginal propensity to invest (MPI).
Which of the following would likely result in a shift of the aggregate demand curve to the right?
A. a tax cut B. a rise in the real interest rate C. a decrease in the quantity of money in circulation D. a decrease in job security