Answer the following statement(s) true (T) or false (F)
1. A Paasche price index makes price changes seem better for the consumer than they really are.
2. A Laspeyres price index is based on the basket consumed in the later period..
3. If the consumer has the same tax bill under a head tax as under an income tax, then the consumer will be indifferent between the two taxes.
4. If the consumer has the same tax bill under a head tax as under an income tax, then less leisure will be consumed under the head tax than under the income tax.
5. The cardinal utility approach has exactly the same implications as the indifference curve approach.
1. True
2. False
3. False
4. True
5. True
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An economy currently has an inflationary gap. An increase in the money wage rate will ________ the inflationary gap and ________ the price level
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
Explain why government, rather than private firms, is required for efficient mosquito eradication programs
Refer to the information provided in Figure 26.6 below to answer the question(s) that follow.
Figure 26.6Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. A decrease in wages and an increase in government spending will, for sure, increase
A. equilibrium output. B. equilibrium output and decrease the price level. C. both the equilibrium output and the price level. D. the price level.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.