Autonomous expenditure is spending that is:
A. not sensitive to the level of income in the economy.
B. what is spent when income changes in the economy.
C. depends on the level of income in the economy.
D. that is determined by the government.
Answer: A
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In the above figure, market equilibrium at point E yields the quantity X. The quantity X* is socially optimal amount. The government can achieve the optimal outcome by
A) setting the price at P1. B) establishing a tax of P3 - P1 per unit of the good sold. C) establishing a tax of P3 - P2 per unit of the good sold. D) setting the price at P4.
Profit is the payment for
a. land and labor b. risk taking and innovation c. capital and labor d. risk taking and capital e. all of the factors of production
Which of the following statements is normative?
A. A large budget surplus is likely to lower interest rates. B. High taxes tend to decrease saving. C. When the Federal Reserve increases the money supply, interest rates decrease. D. Large budget deficits should be avoided.
If the dotted horizontal line represents the effect of a usury law then there is a _____ of loanable funds of _________ billion dollars.
A. surplus; 50
B. shortage; 50
C. surplus; 110
D. shortage; 110