Which of the following best explains why the federal tax rebates in 2008 and 2009 had almost no effects on aggregate demand?
A) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because they were accompanied by more government spending.
B) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because taxpayers did not believe the rebates would occur.
C) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because there were no direct expenditure offsets.
D) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because they did not change taxpayers' permanent income.
D
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A manufacturer of industrial paper shredders can make its machines safer by adding a laser-sensored kill switch to its products. Adding the kill switch costs $17 per machine
The manufacturer estimates that this will prevent 50 injuries for every 30,000 paper shredders sold and that, on average, each injury causes $5,500 of harm. What is the injury cost per paper shredder? Explain whether the manufacturer should or should not add the kill switch to the paper shredder.
When the Fed purchases government bonds the money supply _____ and the federal funds rate _____
Fill in the blank(s) with correct word
The dollar value of output for an economy must always equal the dollar value of income.
Answer the following statement true (T) or false (F)
The following are explanations of the Law of Demand, except:
A. Expectations effect B. Diminishing marginal utility C. Income effect D. Substitution effect