If the government increases the income tax rate they likely intend for:
A. C to decrease, shifting aggregate demand to the left.
B. C to increase, shifting aggregate demand to the right.
C. I to increase, shifting aggregate demand to the right.
D. G to increase, shifting aggregate demand to the right.
A. C to decrease, shifting aggregate demand to the left.
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Explain the difference between a change in quantity demanded and a change in demand
What will be an ideal response?
Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $15 and the per-unit wage, w, is $25, then the average fixed cost of using 9 units of capital and 81 units of labor is:
A. $75. B. $80. C. $5. D. There is insufficient information to determine the average fixed costs.
The following input-requirements data are for Country A, a capital-abundant country that produces nothing but bread and wine using only capital and labor as inputs. 1 Pound of Bread1 Gallon of WineCapital Input5 units2 unitsLabor Input4 units1 unit Which of the following is most likely to happen if Country A engages in free trade with other countries?
A. The prices of both bread and wine will fall in the domestic market. B. The price of bread will rise but the price of wine will fall in the domestic market. C. The price of bread will fall but the price of wine will rise in the domestic market. D. The prices of both bread and wine will rise in the domestic market.
If the production possibilities curve is a downward sloping straight line, then
A) resources are highly specialized, making it difficult to use them for alternative uses. B) technological change has increased. C) production is efficient only when producing at the mid-point. D) all resources must be perfectly adaptable for alternative uses.