When the government transfers resources to the poor in the form of a good or service, it is called:
A. an in-kind transfer.
B. the Earned Income Tax Credit (EITC).
C. Temporary Assistance to Needy Families (TANF).
D. a regressive tax.
Answer: A
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Refer to Figure 3-5. In a free market such as that depicted above, a shortage is eliminated by
A) a price decrease, decreasing the supply and increasing the demand. B) a price increase, increasing the quantity supplied and decreasing the quantity demanded. C) a price increase, increasing the supply and decreasing the demand. D) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true?
A. Tom has an opportunity cost of $41,000. B. Tom earns an accounting profit of $35,000. C. Tom experiences an economic loss of $6000. D. All of these are true.
If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity, long-run equilibrium will eventually be restored by
a. an increase in the economy's productive capacity (LRAS shifts to the right). b. higher resource prices, an increase in SRAS, and a decrease in the general level of prices. c. higher resource prices, a decrease in SRAS, and an increase in the general level of prices. d. a decrease in the natural rate of unemployment.
The economy has an annual inflation rate of 3.5%. It will take approximately how many years for the price level to double?
A. 28 years B. 21 years C. 10 years D. 35 years