For a given, permanent reduction in demand for a product:
a. the decrease in price will be greater the more elastic is supply
b. the decrease in price will be greater in the long run than in the short run.
c. the decrease in price will be greater the more inelastic is supply.
d. none of the above
c
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Suppose Hanna spends her entire budget buying bagels and cups of coffee each day. Also, suppose the marginal utility of her last bagel is 100 and the marginal utility of her last cup of coffee is 200
If the price of a bagel is $4 and the price of a cup of coffee is $2, then A) Hanna needs to decrease her consumption of bagels to maximize her utility. B) Hanna needs to increase her consumption of bagels to maximize her utility. C) Hanna should buy half as many bagels as coffee in order to maximize her utility. D) bagels must provide more total utility than coffee.
"Expansionary fiscal policy is always 100 percent effective when the short-run aggregate supply curve is horizontal." Is this statement TRUE?
A) yes, because theoretically nothing else can offset the effects of fiscal policy B) yes, when the long-run aggregate supply curve is horizontal too C) no, because crowding out could take place D) no, because the increased spending may cause the price level to increase
Historically, investment in stocks have been a prudent investment
A. because stock prices have stayed roughly constant over time. B. because stock prices have generally risen over time. C. because stocks no longer carry any underlying risk. D. because stocks can easily be converted to corporate bonds.
Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000 . How much would a family that earned $150,000 owe?
a. $34,000 b. $42,000 c. $50,000 d. $68,000