An increase in government spending will have the greatest expansionary impact on the economy if it is combined with:
a. an increase in tax revenue equal to the increase in spending.
b. a decrease in tax revenue equal to the increase in spending.
c. unchanged tax revenue.
d. none of these is true.
b
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Which of the following statements best expresses why economic efficiency should be society's first goal?
A. Efficiency maximizes total economic surplus and thereby allows other goals to be more easily achieved. B. Since the consensus on what is a fair distribution of goods is impossible, efficiency is the next best goal. C. People are not really concerned about the problems of the poor, so government must address them instead. D. Efficiency gives the poor an incentive to improve their economic status.
Refer to Figure 9.2. A movement from point b to point d could be caused by a(n)
A) decrease in government spending. B) increase in the price of oil. C) decrease in taxes. D) increase in short-run aggregate supply.
Suppose ordinarily half your class would get an A and half would get a B, with A students having a 25% chance of getting an A and B students having a 25% of getting an A. It costs $100 to persuade the instructor to raise a B grade to an A. A student is willing to pay $40 to insure she will get her usual grade and $70 to insure she will get a higher grade than usual. a. Who would buy insurance and at what price in a competitive equilibrium?
b. Suppose it costs $5 to truthfully signal your type and $10 to falsely signal what type of student you are, and if an insurance company receives no signal, it will interpret this as a signal that you are a B student. What would be the competitive outcome now? c. Suppose a new teacher comes in -- and this teacher is willing to change a grade for just $60. How does your answer to (a) change? d. How would your answer to (b) change? e. Can you change something in the problem that would result in only A-students buying insurance? What will be an ideal response?
The change in total cost resulting from a one-unit increase in production is called: a. average fixed cost
b. average variable cost. c. marginal cost. d. marginal revenue.