During an inflationary period, policy makers who use the AS/AD model would probably recommend an open market:
A. sale of government securities that reduces interest rates.
B. purchase of government securities that raises interest rates.
C. purchase of government securities that reduces interest rates.
D. sale of government securities that raises interest rates.
Answer: D
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Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are
A) a normal good with a price elasticity of demand of 0.5. B) a substitute good with a cross elasticity of 0.5. C) a good with a price elasticity of supply of -0.5. D) an inferior good with an income elasticity of -0.5. E) an inferior good with an income elasticity of -2.0.
If a citizen decides he has had enough of big government and launches a personal campaign to expose big spenders in Congress,
a. he is likely to have his taxes reduced dramatically b. his taxes are not likely to fall very much c. he will be thrown in jail d. he is likely to get elected by other voters e. he will get the support of many special-interest groups
In a progressive tax system
A) the marginal tax rate and the average tax rate are the same for every income level and the same as income increases. B) the marginal tax rate increase as income increases but the average tax rate does not change as income increases. C) the marginal tax rate and the average tax rate increase as income levels increase and the marginal tax rate exceeds the average tax rate. D) the marginal tax rate and the average tax rate decrease as income levels increase and the marginal tax rate is less than the average tax rate.
Refer to the graph shown. If actual inflation is 12 percent and expected inflation is 6 percent, the economy will be at point:
A. A. B. B. C. C. D. D.