Suppose the federal government wants to encourage businesses to increase investment spending. Which policy may be the most effective?
A. An increase in corporate income taxes
B. An increase in real interest rates
C. An increase in warnings of a coming recession
D. An increase in tax deductions for investment spending
Answer: D
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Describe how actual reserves are calculated and explain the difference between desired reserves and excess reserves. How do reserves affect the amount of loans a bank can make?
What will be an ideal response?
According to the Lucas supply function, workers who experience a positive price surprise will work more hours when
A. the income effect dominates the substitution effect. B. there is no income effect from a positive price surprise. C. the substitution effect dominates the income effect. D. there is no substitution effect from a positive price surprise.
Carl is considering attending a concert with a ticket price of $35 . He estimates that the cost of driving to the concert and parking there will total an additional $20 . In order to attend the concert, Carl will have to take time off from his part-time job. He estimates that he will lose 5 hours at work, at a wage of $6 per hour. Carl's opportunity cost of attending the concert equals
a. $35 b. $55 c. $30 d. $65 e. $85
The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of
a. substitution bias. b. product-improvement bias. c. introduction of new goods. d. unmeasured quality change.