Tax distortions refer to the cost of inflation that comes from:
A. the time, money, and effort one has to spend managing cash in the face of inflation.
B. the money, time, and opportunity used to change prices to keep pace with inflation.
C. being penalized via taxes for making more money in dollars, even though real purchasing power hasn't changed at all.
D. labor costs associated with inflation.
Answer: C
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The demand for household appliances increased due to an increase in consumers' incomes. This will lead to a ________, assuming all else equal
A) rightward shift of the labor demand curve of this industry B) leftward shift of the labor supply curve of this industry C) rightward shift of the labor supply curve of this industry D) leftward shift of the labor demand curve of this industry
Refer to Figure 4-3. At the equilibrium price of P1, consumers are willing to buy Q1 pounds of granola. Is this an economically efficient quantity?
A) Yes, because marginal cost is zero at the price of P1. B) No, the marginal cost of the last unit (Q1 ) exceeds the marginal benefit of the last unit. C) Yes, because P1 is the price where marginal benefit equals marginal cost. D) No, the marginal benefit of the last unit (Q1 ) exceeds the marginal cost of that last unit.
What is the difference between adaptive expectations and rational expectations?
What will be an ideal response?
When the economy is operating at the equilibrium level of GDP, we know that
A) total planned real consumption expenditures equal real GDP. B) planned real investment spending equals real net exports of zero. C) total planned real expenditures equal real GDP. D) real net exports equal inventory changes.