Comment on the following statement: "Isoquants must be downward sloping."
What will be an ideal response?
The statement is true. As we move from left to right, the amount of the input on the horizontal axis is increasing. In order for output to remain constant, this must mean that the amount of the input on the vertical axis must be declining. Thus, the isoquant will be downward sloping.
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In the above figure, which part corresponds to a destruction of part of the nation's capital stock?
A) Figure A B) Figure B C) Figure C D) Figure D
Which of the following will be most likely to cause the production possibilities curve for a country to shift inward?
a. an increase in the labor force b. an increase in unemployment c. development of an improved technological method of production d. a decrease in the stock of physical capital
A tax system under which an individual pays a higher fraction of his income in taxes at higher levels of income is formally described as
A. digressive. B. progressive. C. proportional. D. regressive.
Which of the following statements is an example of the wealth effect?
A. If people feel wealthier because their stock portfolios have risen, they tend to increase their consumption of goods and services. B. One of the many factors that caused the Great Depression was that by 1930 the market for consumer durables was saturated. C. When wealthy people expect a recession they tend to postpone major purchases until times get better. D. When people expect inflation they often buy consumer durables before prices go up.