The effect of imposing a lump-sum tax is to:
A. reduce the absolute levels of consumption and saving at each level of GDP and to reduce
the size of the multiplier.
B. reduce the absolute levels of consumption and saving at each level of GDP but to not
change the size of the multiplier.
C. reduce the absolute levels of consumption and saving at each level of GDP and to
increase the size of the multiplier.
D. increase the absolute levels of consumption and saving at each level of GDP and to
increase the size of the multiplier.
B. reduce the absolute levels of consumption and saving at each level of GDP but to not
change the size of the multiplier.
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In Figure 10-5 above, suppose that the population growth rate declines. This causes a movement of the steady-state point such as from points
A) A to B. B) D to B. C) D to C. D) A to C. E) A to D.
If everyone expects prices to fall but they do not, then
a. nothing happens. b. the IS curve shifts to the left and the AD curve shifts to the right. c. both IS and AD shift to the right. d. both IS and AD shift to the left. e. the IS curve shifts to the right, the AD curve shifts to the left.
If income in the United States rises relative to income in Japan, the yen should appreciate against the dollar, ceteris paribus.
Answer the following statement true (T) or false (F)
If the price of a cola increased by 10% and consumers responded by purchasing 20% less cola, the absolute value of price elasticity of demand for cola would be
A. 1.2. B. 0.20. C. 0.5. D. 2.