What is shown by the budget line in a two-product (A and B) case? Describe what happens when there is a change in income or the price of a product
Please provide the best answer for the statement.
A budget line shows various combinations of two products which can be purchased with a given money income of a consumer and given the prices of the two products. A decrease in the money income of a consumer shifts the budget line inward to the origin. An increase in the money income of a consumer shifts the budget line outward from the origin. Price changes in either of the two products will rotate the budget line along one axis. Assume that the quantity of product A is shown on the vertical axis. If the price of A rises, less of A will be purchased at each of the possible combinations of A and B, so the budget line will shift downward along the vertical A axis towards the origin. A decrease in the price of A would have the curve shift upward along the A axis away from the origin.
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When tax revenues exceed the government's outlays, the budget
A) has a surplus and the national debt is decreasing. B) is balanced and the national debt is decreasing. C) has a deficit and the national debt is increasing. D) has a surplus and the national debt is increasing. E) None of the above because by law tax revenue cannot exceed the government's expenditures.
In the above figure, if the market produces the efficient amount of purses then producer surplus equals
A) triangle bcd. B) triangle adc. C) rectangle bcde. D) trapezoid adec.
All of the following are reasons for using the differences estimator with additional regressors, with the exception of
A) efficiency. B) providing a check for randomization. C) providing an adjustment for "conditional" randomization. D) making the difference estimator easier to calculate than in the case of the differences estimator without the additional regressors.
Budget deficits are inflationary when
a. the Federal Reserve contracts the money supply. b. the economy has lots of slack and the aggregate supply curve is horizontal. c. the economy is at full employment and the aggregate supply curve is vertical. d. private citizens buy the bonds to finance the debt.