Refer to the above graph. If the production possibilities curve for an economy is at CD, but the economy is operating at point x, the reasons are most likely to be because of:
A. lack of full employment and inefficient allocation of resources.
B. improvement in labor productivity and the number of work-hours.
C. increases in the quantity and the quality of resources.
D. technological progress and industrial change.
Answer: A
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Reducing the marginal tax rate on income will
A) raise the return to entrepreneurship and encourage the opening of new businesses. B) increase the after-tax return on saving, and encourage saving. C) reduce the tax wedge faced by workers and increase labor supplied. D) All of the above are correct.
To promote economic efficiency, government should
a. keep all prices as low as possible. b. keep all prices high so that people will save more money. c. allow the market to set low prices for abundant goods and high prices for scarce goods. d. never interfere with firms' price setting powers.
Refer to the above graph. Which of the lines in the above diagram represent(s) a progressive tax?
A. Both A and B B. B only C. C only D. D only
Replacing employment-based health care with a government-run system could reduce employers payments for their workers insurance, but the amount that they would have to pay in overall compensation
A) would remain essentially unchanged. B) would dramatically increase. C) would fall to zero. D) would dramatically decrease.