If you believe that the LM curve is horizontal, what type of policy would you recommend to stimulate the economy?
A) An increase in government spending
B) A reduction in government spending
C) An increase in the money supply
D) A reduction in the interest rate
A
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In the above figure, who pays the larger share of the tax?
A) buyers B) sellers C) Buyers and sellers each pay the same amount of the tax and each pays $10 per compact disc. D) Buyers and sellers each pay the same amount of the tax, but the amount each pays is different than $10 per compact disc.
Income tax payments
a. fall during periods of prosperity, thus reducing inflationary pressures b. fall during periods of prosperity, thus increasing inflationary pressures c. rise during periods of prosperity, thus reducing inflationary pressures d. fall during recessions, thus increasing the problem of unemployment e. rise during recessions, thus increasing the problem of unemployment
If a 10 percent rise in airfares leads to a 5 percent increase in total expenditures on air travel, the price elasticity of demand for air travel in this range must be
a. 2. b. elastic. c. 0.5. d. inelastic.
If you own a building and you decide to use that building to open a book store,
A. the only cost relevant to this decision is the price you paid for the building. B. the opportunity costs equal the cost of inventory. C. there is an opportunity cost of using this building for a book store because it could have been used in other ways. D. there is no opportunity cost of using this building for a book store because you own it.