Which of the following is an example of an automatic stabilizer?
a. Congress legislates lower tax rates to increase consumption and investment.
b. Tax rates are increased during a recession to maintain a balanced budget.
c. A regressive income tax system reduces tax revenues (as a share of income) as income expands.
d. Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.
d
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Are stocks and bonds considered part of the investment component of GDP?
What will be an ideal response?
Suppose the Chinese central bank wants to keep the exchange rate of its currency value constant over time. An increase in the demand for Chinese goods by American residents will lead the Chinese central bank to
A) coordinate with the U.S. central bank in order to increase the supply of the U.S. dollar in the foreign exchange market. B) increase the demand for the Chinese currency in the foreign exchange market. C) use its dollar reserves to buy the Chinese currency in the foreign exchange market. D) sell the Chinese currency in exchange for U.S. dollars in the foreign exchange market.
A possible rational reason why older people, on average, show less interest in learning how to use new technologies is because
A. they are acting irrationally. B. the financial cost for older people is greater than the cost to younger people. C. they have fewer years to gain a return from learning how to use new technologies. D. older people are not as smart as (today's) young people.
In economics we assume that the goal of a firm is to
A. maximize total sales. B. maximize economic profits. C. maximize costs. D. maximize revenue.