If a tax is placed on one good and not another, the effect that causes you to buy less of the taxed good because it has become relatively more expensive is called the
A. domino effect.
B. substitution effect.
C. net effect.
D. income effect.
Answer: B
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The opportunity cost of leisure is approximated by:
a. the price of leisure activities (such as theater tickets). b. an individual's hourly real wage rate. c. commuting expense. d. an individual's total income.
Which of the following is correct?
a. Policy lags are normally much shorter for fiscal policy than for monetary policy. b. Congress usually makes major fiscal policy changes in a fairly short period of time. c. Expenditure lags are much longer for investment, the main way in which monetary policy affects aggregate demand. d. Monetary policy affects aggregate demand more quickly than fiscal policy, such as tax or government spending changes.
Dan is the pricing director for a near monopoly. He has been warned to avoid predatory pricing. Which of the following actions does Dan need to avoid?
a. pricing products at exactly the same level as competitors b. charging higher prices when raw material costs increase c. charging different prices to different customers based on their occupation d. lowering prices to bankrupt his competitors, then raising prices dramatically
The category of financial intermediaries called securities firms includes each of the following, except:
A. brokerages. B. credit unions. C. mutual funds. D. investment banks.