Which of the following is an example of a normative question?
A. How will an increase in the inheritance tax affect tax revenues?
B. What fraction of an income tax cut will be spent on imported goods?
C. Should Florida implement a state income tax to reduce its deficit?
D. How will an increase in unemployment benefits affect the unemployment rate?
Answer: C
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What is the difference between the Treasury and the Federal Reserve? Is there any difference in the effect on the money supply between the sale of bonds by the Treasury and the sale of bonds by the Fed?
Once a book has been written, would an author facing an inelastic demand curve for the book prefer to raise or lower the book's price? Why?
A. The author would raise or lower the price. Because the author's cost is a sunk cost, any increase or decrease in price will increase revenue and profit. B. The author would prefer to raise the book's price. Raising prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises. C. The author would prefer to lower the book's price. Lowering prices when demand is inelastic increases revenue. Because the author's cost is a sunk cost, profit also rises. D. The author would not change the price. Because the author's cost is a sunk cost, any change in price will decrease revenue and profit. References
An economic argument in favor of providing medical care through HMOs is that they:
A. reduce incentives for providing unnecessary or excessive care. B. reduce the probability of patients filing a malpractice claim. C. reduce the cost of seeing a specialist. D. increase provision of care to the sickest patients.
When a large amount of output is produced per unit of the input, the input is said to exhibit
A. high productivity. B. derived productivity. C. low productivity. D. marginal productivity.