The crowding out of consumer spending by an increase in taxes will be the greatest when
A) consumers would have spent the entire amount they now must pay in taxes.
B) consumers would have saved the entire amount they now must pay in taxes.
C) consumers would have spent only a fraction of the amount they now must pay in taxes.
D) the government has a history of increasing taxes on a regular basis.
A
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Between 2013 and 2016, a country's nominal GDP grew by 18 percent and its inflation rate (based on the chain-weighted price index for GDP) was 11 percent. How fast did real GDP grow over this period?
What will be an ideal response?
Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has
a. caused GDP to fall. b. not caused any change in GDP. c. caused GDP to rise. d. probably changed GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.
When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms' owners and workers. b. a tradeoff only if some firms are forced to close. c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. d. no tradeoff, since everyone benefits from reduced pollution.
An effective minimum wage creates a surplus of labor and increases the level of unemployment.
Answer the following statement true (T) or false (F)