________ is caused by the fact that taxes distort economic decisions.
A. Excess burden
B. Neutrality
C. Market failure
D. Tax shifting
Answer: A
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Define a budget set. Is it the same as a budget constraint?
What will be an ideal response?
Which of the following about economic freedom is true?
a. Low income countries that have adopted institutions and policies consistent with economic freedom have grown rapidly. b. Low-income countries that have adopted institutions and policies consistent with economic freedom have failed to grow more rapidly than economies that are relatively unfree. c. Economic freedom appears to improve the performance of developed economies, but not those that are less developed. d. Economic freedom appears to improve the performance of less developed economies, but not those that already have a high degree of development.
Which of the following is an argument against trying to use policy to stabilize the economy?
a. Recessions represent a waste of resources. b. Pessimism on the part of households and firms may become a self-fulfilling prophecy. c. "Leaning against the wind" requires policymakers to increase aggregate demand in recessions and reduce aggregate demand in booms. d. Macroeconomic forecasting is not developed sufficiently to allow policymakers to change aggregate demand at the proper time.
The productivity of the agriculture sector (of the economy) increases dramatically. A likely consequence is:
A) increased resources flowing into the agriculture sector. B) an increase in the supply of foodstuffs and lower prices for foodstuffs. C) an increase in the total revenue (farmers' receive) from selling foodstuffs, assuming the demand for their products is elastic. D) a decrease in the total revenue (farmers' receive) from selling foodstuffs, assuming the demand for their products is inelastic. E) none of the above