List and explain the three fundamental economic questions that must be answered by all economic systems
What will be an ideal response?
First, all economic systems must answer the question of "what goods and services get produced and in what quantities?" In other words, among the near infinite types of goods and services, society must decide what will be produced and how much of each good and service will be produced. Next, every economic system must decide, "how are goods and services produced?" This question needs to be answered because there are always many ways to produce a particular good or service (for instance, using a lot of workers and only a little machinery, or a lot of machinery and fewer workers), so the method that will be used must be decided. Finally, once the goods and services are produced the society must decide "for whom are the various goods and services produced?" In other words, societies must decide whether the goods and services are distributed so that everyone gets about the same amount or whether they are distributed so that some people get more than others.
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The U.S. tax system
A) reduces inequality and shifts the Lorenz curve away from the line of equality. B) reduces inequality and shifts the Lorenz curve toward the line of equality. C) increases inequality and shifts the Lorenz curve toward the line of equality. D) increases inequality and shifts the Lorenz curve away from the line of equality.
The Sherman Antitrust Act outlawed tying contracts
a. True b. False Indicate whether the statement is true or false
The federal government buys $10 million worth of aircraft engines from General Motors. If the MPC is .80 what will be the impact on aggregate demand, other things being equal? a. Aggregate demand will increase $8 million
b. Aggregate demand will increase $12.5 million. c. Aggregate demand will increase $18 million. d. Aggregate demand will increase $50 million.
Lower real interest rates
a. tend to shift the consumption function upward. b. have no significant effect on consumption. c. tend to shift the consumption function downward. d. tend to move the consumer upward along the consumption function.