If the price of inputs rises and foreign income rises:
a. Price index falls, and real GDP falls.
b. Price index falls, and the change in real GDP is uncertain.
c. The change in price index is uncertain, and real GDP rises.
d. Neither the price index nor real GDP changes.
e. Price index rises, and the change in real GDP is uncertain.
.E
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Suppose that the income tax in the United States was such that all households had to pay 20 percent of their income to the government as taxes. This tax is an example of
A) a regressive tax. B) a proportional tax. C) a progressive tax. D) an efficient tax.
Refer to Table 9-11. All of the following are terms of trade that could possibly benefit both countries except
A) 1 hat : 1 clock B) 1 hat : 3/5 of a clock C) 1 hat : 1.5 clocks D) 1 hat : 2.5 clocks
The own price elasticity of demand for apples is ?1.5. If the price of apples falls by 6 percent, what will happen to the quantity of apples demanded?
A. It will fall 4 percent. B. It will increase 4 percent. C. It will increase 9 percent. D. It will fall 6 percent.
As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will
A. shift to the left, but the elasticity of demand will not be affected. B. not be affected because the new firms do not produce a perfect substitute for its product. C. shift to the left and become more elastic because there are now more substitutes for its product. D. shift to the left and become less elastic because there are now more substitutes for its product.