The 1964 tax reform was designed to _____
a. simplify the tax structure
b. remove the bias towards consumption in the tax code
c. cut marginal tax rates in order to increase aggregate demand
d. cut average tax rates in order to decrease aggregate demand
c
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Give some examples of the operation of the principle of comparative advantage.
What will be an ideal response?
The federal government, in order to fund expanded health care, imposes a lump-sum tax on all business property. Profit-maximizing firms that stay in business will respond by
a. raising prices to pay the tax. b. cutting output to reduce costs. c. lowering prices to stimulate demand. d. doing nothing.
In a Walrasian equilibrium, which of the following constrains an individual when he optimizes?
a. The market prices. b. His tastes. c. The actions of other individuals. d. Nothing-the individual has no constraints in a Walrasian equilibrium.
Which of the following is a non-price determinant of supply?
A. technological advances in production B. the number of consumers C. consumers' incomes D. the price of related goods consumers may buy