One reason the luxury tax on yachts imposed by the U.S. Congress in 1991 failed to produce much tax revenue was that the demand for yachts was elastic.
Answer the following statement true (T) or false (F)
True
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If Y = $500 billion, autonomous consumption = $400 billion, and the marginal propensity to save = 0.20, then saving will equal:
A. ?$300 billion. B. $300 billion. C. -$80 billion. D. $80 billion.
In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500rI = 150 - 1,000rG = 200NX = 50T = 100Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 4 percent is ________, and the eventual impact on short-run equilibrium output is ________.
A. an increase by 15 units; a increase by 150 units. B. an increase by 150 units; a decrease by 1,500 units. C. an increase by 150 units, an increase by 150 units. D. a decrease by 15 units, a decrease by 150 units.
Recessions
a. almost never occur in the American economy. b. follow a regular and predictable cycle. c. are common features of the American economy. d. have been abolished by wise macroeconomic policy.
A rise in the price level decreases the real value of financial assets with fixed money values and, as a result, decreases spending by the holders of these assets.
Answer the following statement true (T) or false (F)