If the price of refillable butane lighters was to decrease, then
A) the demand for butane would decrease.
B) the demand for butane would increase.
C) the quantity of butane demanded would increase.
D) the quantity of butane demanded would decrease.
Answer: B
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If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action
a. lowers both inflation and unemployment. b. lowers inflation but raises unemployment. c. raises inflation but lowers unemployment. d. raises both inflation and unemployment.
Which of the following statements about the Earned Income Tax Credit Program (EITC) program is FALSE?
A. It is the largest poverty reduction program in the U.S.. B. It provides rebates of Social Security taxes to low-income workers. C. On net the EITC discourages work by low- or moderate- income earners more than it rewards work. D. Recipients who receive benefit payments under Social Security are also eligible for SSI.
Answer the following questions true (T) or false (F)
1. If in the long run a firm makes zero economic profit, it should exit the industry. 2. A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000. If the prevailing market price is $48, the number of firms and the industry's output will decrease in the long run. 3. Suppose there are economies of scale in the production of a specialized memory chip that is used in manufacturing microwaves. This suggests that the microwave industry is a decreasing-cost industry.
If we read that the CPI had value of 120 in 2005, we would know that
a. the typical market basket in 2005 was 20 percent more expensive than in the previous year b. the typical market basket in 2005 was 120 percent more expensive than in the base year c. the typical market basket in the base year was 120 percent more expensive than in 2005 d. the typical market basket in 2005 was 20 percent more expensive than in the base year e. the cost of a loaf of bread is higher now than it has been during the past ten years