Assume that expected inflation is based on the following: ?et = ??t-1. If ? = 0, we know that
A) a reduction in the unemployment rate will have no effect on inflation.
B) low rates of unemployment will cause steadily increasing rates of inflation.
C) high rates of unemployment will cause steadily declining rates of inflation.
D) the Phillips curve illustrates the relationship between the level of inflation rate and the level of the unemployment rate.
D
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Diffusion of responsibility exists when
A) the members of a group believe one thing but mistakenly assume that most of the other members believe something else. B) a group of bystanders all agree that something needs to be done but each feels less personal responsibility for taking action because each perceives that there are others who could take action. C) a majority of people in a group do not have the intellectual capacity of arriving at a viable solution to a public goods problem. D) the least-capable member of a group exerts his influence over the rest of the group when trying to arrive at a decision on how to internalize an externality.
Which of the following is a difference between an income tax and an excise tax on gasoline? a. An income tax exemplifies the ability to pay principle, while an excise tax on gasoline exemplifies the benefit principle. b. An income tax is based on a marginal tax rate, while an excise tax on gasoline is based on an average tax rate. c. An income tax is proportional, while an excise tax on
gasoline is progressive. d. An income tax increases consumer surplus, while an excise tax on gasoline increases producer surplus.
How might the implementation of price controls have a negative effect?
a. by strengthening the market’s information-transmission system too much b. by closely aligning the economic decisions of households and firms c. by depriving the market price of its meaning for buyers and sellers d. by enforcing the equitable distribution of scarce resources.
When beneficiaries have to own something, such as farm land or a license, in order to obtain a subsidy,