The price-cost squeeze is:
A. a tactic used by a vertically integrated firm to raise rivals' costs of inputs, while maintaining final product prices.
B. the act of charging a low price initially upon entering a market to gain market share.
C. a strategy whereby a firm temporarily prices below its marginal costs to drive competitors out of the market.
D. a strategy whereby an incumbent maintains a price below the monopoly price in order to prevent entry.
Answer: A
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A tax imposed by a government on imports of a good into a country is called a
A) tariff. B) value added tax. C) sales tax. D) quota.
The Laffer curve is based upon the idea that
A. the higher the tax rate the greater the tax receipts. B. high tax rates may yield less tax revenue than lower tax rates. C. the lower the tax rate the greater the tax receipts. D. income taxes are inefficient because tax reform has made it more difficult to legally avoid taxation.
Okun’s law refers to
a) The tendency for recessions in the USA to spread throughout the world b) The generally stable negative relationship between the output gap and deviations of unemployment from the natural rate c) The generally stable positive relationship between the output gap and deviations of unemployment from the natural rate d) The tendency for business cycle volatility to fall over time e) The negative relationship between unemployment and job vacancies
The amount of price inflation that the economy experiences eventually depends on the size of the spending multiplier.
Answer the following statement true (T) or false (F)