If two countries are economically identical except that citizens in one country have more leisure time, then the level of GDP:
A. will be higher in the country with less leisure time.
B. will be higher in the country with more leisure time.
C. will be the same in both countries.
D. will be greater than the level of economic well-being in each country.
Answer: C
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Over twenty years ago the city of Washington D.C. was facing a budgetary shortfall. In a plan to increase tax revenue the mayor and city council agreed to raise the excise tax on gasoline
Typically for goods like gasoline which are price inelastic this should have led to an increase in tax revenue. However, just the opposite happened – tax revenue plummeted! What could explain this seemingly paradoxical result?
An example of a stock variable in economic theory will be: a. the amount of money saved by an individual each week
b. the amount of money spent on buying gasoline each month. c. the weekly grocery bill of an average household. d. the total value of the government bond held by an individual. e. the total fiscal spending during a particular quarter.
Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases
a. the inflation rate and the nominal interest rate by the same number of percentage points. b. nominal interest rates but by less than the percentage point increase in the inflation rate. c. the inflation rate but not the nominal interest. d. neither the inflation rate nor the nominal interest rate.
A major problem with commodity money is that, to be useful, money must be
A. divisible. B. storable. C. portable. D. All of these responses are correct.