On a graph showing the influence of automatic stabilizers on the economy, tax revenues and real GDP have a(n):
A. direct relationship as shown by an upward-sloping line T.
B. direct relationship as shown by a downward-sloping line T.
C. inverse relationship as shown by an upward-sloping line T.
D. inverse relationship as shown by a downward-sloping line T.
Answer: A
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If the ratio of price of cloth (PC) divided by the price of food (PF) increases in the international marketplace, then
A) the cloth exporter will increase the quantity of cloth produced. B) the cloth exporter will increase the quantity of cloth exported. C) the food exporter will increase the quantity of food exported. D) the cloth exporter will decrease the quantity of cloth exported. E) the country would import more cloth.
Tax incidence:
A. depends on the relative elasticity of the supply and demand curves in a market. B. depends on whether it is a buyers tax or sellers tax that is being imposed. C. depends on the amount of tax revenue generated once administrative burdens are taken into account. D. depends on whether the tax revenue is greater than the deadweight loss caused by the tax.
Suppose that a monopolistically competitive market is in its long-run equilibrium. If the market demand curve shifts to the right due to changes in consumer preferences:
A. the number of firms in the market will increase in the short run. B. firms will earn positive economic profits in the short run. C. firms' average costs of production will increase as they increase output levels in the short run. D. None of these
Suppose Mexico can produce 5 autos or 10 corn. Suppose the United States can produce 4 autos or 20 corn. If opportunity costs are constant for both countries, then
A) the United States has a comparative advantage in corn production. B) Mexico has a comparative advantage in corn production. C) the United States cannot gain from trade with Mexico. D) the United States has a comparative advantage in auto production.