When the real wage rate changes, firms change the __________ and the level of production.
A. wage rate of employees
B. quality of goods or services produced
C. quantity of labor employed
D. production plans
Answer: C. quantity of labor employed
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According to the classical dichotomy, when the money supply doubles which of the following doubles?
a. the price level and nominal GDP b. the price level and real GDP c. only real GDP d. only the price level
When the U.S. economy hits a recession, fiscal policy automatically becomes:
A. contractionary because average tax rates go down and spending on welfare programs goes up. B. expansionary because average tax rates go down and spending on welfare programs goes up. C. discretionary because the government is quick to react to changes in the business cycle. D. contractionary because average tax rates go up and spending on welfare programs goes down.
Suppose when the price of mascara is $12, the quantity demanded is 450, and when the price is $8, the quantity demanded is 550. Using the mid-point method, the price elasticity of demand is:
A. -55 B. -2.0 C. -0.5 D. -180
The ultimate burden of the corporate profits tax appears to depend on all of the following except
A. the relative capital/labor intensity of the corporate and noncorporate sectors. B. the tax rate structure of the corporate profits tax. C. the ease with which capital and labor can be substituted in the corporate and noncorporate sectors. D. the elasticities of demand for the products produced in the corporate and noncorporate sectors.