Using the above figure, if the government levies a new unit tax in this market, S represents the original supply curve, and St represents the after-tax supply curve, then the after-tax price paid by consumers is the vertical distance from the origin to
A. point F.
B. somewhere between point B and point A.
C. point A.
D. point B.
Answer: D
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The most common type of investment in human capital is
A) having more children per family. B) the migration of labor in search of better jobs. C) expanded years of schooling. D) improved health care and maintenance.
Suppose the real GDP is in equilibrium at full employment and the MPC is .80. If government wants to increase its purchase of goods and services by $16 billion without changing equilibrium real GDP, taxes should be
A. reduced by $20 billion. B. increased by $16 billion. C. reduced by $16 billion. D. increased by $20 billion.
The principle of diminishing returns implies that as one input increases while the other inputs are held fixed, output:
A. increases at an increasing rate. B. increases at a decreasing rate. C. decreases at a decreasing rate. D. decreases at an increasing rate.
An important effect of foreign currency speculators is that
A. they have consistently lost money and have left the market. B. they have pushed exchange rates to wider extremes than most economists predicted. C. they actually limit the volatility of exchange rate movements. D. they have had no effect at all on exchange rate volatility.