An excise tax on gasoline causes
A) supply of gasoline to shift to the left.
B) a reduction in the quantity of gasoline demanded.
C) the market clearing price of gasoline to rise.
D) All of the above are correct.
Answer: D
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Let C = 800 + 0.6y and I = 100. Assume no government or foreign sectors. If investment decreases by 40, the equilibrium output decreases by a total of
A) 800. B) 480. C) 100. D) 25.
For each of the following changes, explain what will happen to the expected marginal product of capital curve or the user cost of capital curve, and what will happen to the desired capital stock:
a. The real price of capital goods increases. b. The depreciation rate increases. c. The corporate income tax rate decreases. d. The real interest rate decreases. e. Expected future output decreases.
In the above figure, which of the following is a possible explanation for the reduction in the equilibrium value of the European euro from P2 to P1?
A) an increase in demand for French automobiles B) the European central bank's decision to buy euros on the world market C) a decrease in the price of California wines, assuming that French wines and California wines are substitutes D) an increase in the price of California wines, assuming that French wines and California wine are substitutes
In calculating a price index, the period to which prices in all other periods are compared is known as the
a. comparison period. b. average period. c. current period. d. base period.