Imposing a tax on sales of a product
A) shifts the market demand curve for the product.
B) shifts the market supply curve for the product.
C) shifts both the market supply and demand curve for the product.
D) has no effect on either the market demand or the market supply curve for the product.
Answer: B
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The basket of goods measured in computing the CPI includes goods produced in prior years and imported goods
Indicate whether the statement is true or false
Suppose the average value of in-kind transfers increases by $2,000 from 2013 to 2014 . The poverty rate
a. is more likely to understate the true level of poverty. b. is more likely to overstate the true level of poverty. c. will increase by $2,000 divided by the poverty level. d. Both b and c are correct.
Two bottles of over-the-counter pain reliever sit side-by-side in a grocery store: Advil (a brand name) sells for $5.00, while Feel Better (not a brand name) sells for $2.50 . In a typical day the store sells some of each type of pain reliever, which suggests that
a. no rational consumer would spend twice as much for Advil as he would for Feel Better. b. some consumers must perceive that Advil is a higher quality product. c. Advil has no incentive to maintain the quality of its product just because of the Advil brand name. d. Advil spends money on advertising to reduce competition in the market.
If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding out, a $15 billion increase in government expenditures would shift the aggregate demand curve right by
a. $60 billion, but the effect would be larger if there were an investment accelerator. b. $60 billion, but the effect would be smaller if there were an investment accelerator. c. $45 billion, but the effect would be larger if there were an investment accelerator. d. $45 billion, but the effect would be smaller if there were an investment accelerator.