Higher unemployment benefits funded by higher taxes on earnings would:
a. decrease aggregate supply in an economy.
b. increase the supply of labor in an economy.
c. increase the price level in an economy
d. decrease aggregate demand in an economy.
e. increase the opportunity cost of leisure.
a
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If income increases from $110,000 to $120,000 and consumption from $108,000 to $114,000 . the marginal propensity to consume is:
a. 0.40. b. 0.60. c. 0.94. d. 1.60.
In long-run equilibrium for a competitive firm, economic profits:
A. will be positive. B. will be negative. C. will be zero. D. may be positive, negative, or zero.
In the diagram of the production function, a beneficial supply shock is shown by
A. an upward shift in the production function. B. a downward shift in the production function. C. a movement up along the production function. D. an increase in the convexity of the curve.
Answer the following statement(s) true (T) or false (F)
1. Although a sales tax hurts both producers and consumers, their losses are fully offset by the benefits created by the tax revenues. 2. One effect of a tax is that output in the market which is taxed falls. 3. Even if total surplus is maximized, there is still a chance that there will be a deadweight loss. 4. When the Pareto criterion is used to choose between different policies, any recommendation requires unanimous agreement. 5. If the potential Pareto criterion rejects a policy change, then the efficiency criterion will reject it as well.