According to the life-cycle hypothesis, if a person received a payment roughly equal to her current annual income, her consumption would:
a. roughly double
b. increase but not as much as the increase in income
c. increase by more than the increase in income
d. would increase at all
e. none of the above
Ans: b. increase but not as much as the increase in income
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If federal taxes are cut by $10 billion, aggregate demand
A) increases by $10 billion. B) increases by $10 billion multiplied by the government expenditure multiplier. C) increases by $10 billion multiplied by the tax multiplier. D) decreases by $10 billion. E) decreases by $10 billion multiplied by the tax multiplier.
The marginal rate of technical substitution is equal to:
A) the absolute value of the slope of an isoquant. B) the ratio of the marginal products of the inputs. C) the ratio of the prices of the inputs. D) all of the above E) A and B only
The cross-price elasticity of demand for generic brand pasta, an inferior good, would be expected to be less than zero
Indicate whether the statement is true or false
To resolve the problem of the negative effect of conspicuous consumption goods on society's welfare, an economist most likely would make the suggestion that:
A. conspicuous consumption goods should be taxed. B. conspicuous consumption goods should be subsidized. C. nothing should be done because laissez faire is the best policy. D. conspicuous consumption goods should be eliminated.