In the graph shown above, if market price were $6, there would be
A. a surplus.
B. a shortage.
C. a surplus and a shortage.
D. neither a surplus nor a shortage.
A. a surplus.
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The benefits-received principle of taxation is most evident in:
A. progressive tax rates. B. excise taxes on gasoline. C. the personal income tax. D. the corporate income tax.
You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?
A. Reduce government spending by $300 billion and increase taxes by $300 billion. B. Increase government spending by $300 billion and reduce taxes by $300 billion. C. Decrease both government spending and taxes by $300 billion. D. Increase both government spending and taxes by $300 billion.
The multiplier means that the response to fiscal policy is not completed immediately.
Answer the following statement true (T) or false (F)
The vertical distance between a firm's average total cost curve and its average variable cost curve is its
a. marginal cost b. sunk cost c. total variable cost d. total fixed cost e. average fixed cost