Sue consumes only sandwiches and soda and is at her best affordable point. The price of a sandwich falls. The substitution effect is that Sue substitutes ________ for ________. The income effect is that Sue ________
A) sandwiches; soda; buys less of both goods
B) soda; sandwiches; buys more soda and fewer sandwiches
C) sandwiches; soda; buys more of both goods
D) soda; sandwiches; buys less soda and more sandwiches
C
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Corporate income is taxed twice—once in the form of corporate income tax and the second time when the owner must pay income tax on dividends. What are the effects of this double taxation?
What will be an ideal response?
The distinction between discretionary fiscal policy and the use of automatic stabilizers is that:
a. only discretionary fiscal policy can stimulate the economy b. only automatic stabilizers can stimulate the economy. c. discretionary fiscal policy, once adopted, is built into the structure of the economy. d. automatic stabilizers, once adopted, are built into the structure of the economy. e. only discretionary fiscal policy can be used by the federal government.
Financial intermediaries are best described as:
a. informal institutions that provide funds to the government to manage budget deficits. b. institutions that accept deposits and make loans. c. institutions that control the money supply in the economy. d. institutions that provide financial aid to foreign countries. e. individuals who manage other's investment portfolios.
A monopsonistic employer faces a
A. perfectly inelastic labor supply curve. B. MFC curve that is greater than the wage rate at each quantity of labor. C. MFC curve that is less than the wage rate at each quantity of labor. D. perfectly elastic labor supply curve.