An advantage of a negative income tax is _____
a. it is more paternalistic than in-kind transfer payments
b. it could replace many existing transfer programs
c. it eliminates the incentive to substitute into leisure
d. it has no excess burden
b
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The slope of a typical isoquant is negative because to produce a given output, a producer
A) can use less of one input only if the productivity of that input increases B) will use more of one input only if the price of that input falls. C) will use more of one input only if it uses more of another. D) can use less of one input only if it uses more of another.
Over the past 20 years, purchases of foreign financial assets by U.S. investors has
A) increased significantly. B) decreased significantly. C) remained fairly consistent. D) become negative.
The domestic real interest rate (r) for a given country must be the same as the world real interest rate (rw) ________
A) if perfect capital mobility is assumed B) because with no barriers to capital flows, if rw > r domestic residents would just borrow abroad putting upward pressures on the domestic rate until both rates equal each other C) because with no barriers to capital flows, if rw < r domestic residents would only lend to foreigners putting downward pressures on the domestic rate until both rates equal each other D) all of the above E) none of the above
Identify the main planks of the classical thought. (4 Marks)
a. Distinguish between voluntary and involuntary unemployment. (4 Marks) b. Explain the process through which classical unemployment can occur in an economy.