Teesha is a producer of leather belts and bags. She has just learned that a new tax is going to be assessed on leather goods. If Teesha understands how taxes influence pricing, what is her most likely reaction?
a. She is upset because she knows she will receive less for her products.
b. She is happy because she knows she will receive more for her products.
c. She does not care because she knows this will not affect her products.
d. She is happy because she will have more producer surplus on her products.
a. She is upset because she knows she will receive less for her products.
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If inflation was zero percent, nominal interest rates would be:
A. equal to real interest rate. B. larger than real interest. C. smaller than real interest. D. at the optimal rate.
Assume that there is a $20 billion increase in government purchases. If MPC = 0.8, the sum of the indirect effect on aggregate demand through induced additional consumption purchases is equal to: a. $16 billion
b. $20 billion. c. $80 billion. d. $100 billion.
If minimum wage is set below equilibrium wage rate, no effect.
What will be an ideal response?
What happens to the aggregate expenditure curve as the price level decreases?
a. It shifts up. b. It shifts down. c. It remains unchanged. d. It becomes steeper.