Why is economic development a contentious subject? Use one of the controversies mentioned in the chapter to illustrate why people may not agree on the answers
What will be an ideal response?
Any of the controversies mentioned in the chapter may be used. Students should be able to give some ideas on at least one of these to explain differences of opinion.
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Consumer surplus increases whenever the price of a good increases
a. True b. False Indicate whether the statement is true or false
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Refer to Sales Tax. After the tax is imposed, social gain is equal to
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + D + E + G + H + J.
b. area B + C + F + I - J.
c. area A + B + C + D + E + F + G + H + I.
d. area A + B + C + D + F + G + I.
Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be ________ and make up a ________ portion of a consumer's budget
A) an inferior good; very small B) a normal good; very large C) an inferior good; very large D) a normal good; very small