Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP?
A) There is a $20 billion decrease in equilibrium GDP.
B) There is a $15 billion decrease in equilibrium GDP.
C) There is a $15 billion increase in equilibrium GDP.
D) There is a $20 billion increase in equilibrium GDP.
B
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An economist observed that as more computers are added to a factory, the costs of production initially decline, reach a minimum, and then rise
In a diagram that has costs on the vertical axis and the number of computers on the horizontal axis, the relationship always is A) negative and then linear after the minimum point. B) linear and then positive after the minimum point. C) negative and then positive after the minimum point. D) positive and then negative after the minimum point. E) negative both before and after the minimum point.
When economists refer to "the invisible hand," what do they mean?
What will be an ideal response?
Which of the following goods would have the most inelastic demand?
A) bread B) big screen TVs C) luxury cars D) ski vacations
Assume that the labor market is perfectly competitive. An increase in the productivity of labor
A) causes the marginal factor cost of labor to decrease. B) generates a lower wage rate. C) causes an increase in the demand for labor. D) causes a reduction in the demand for labor since each worker is now more productive.