As real disposable income increases, consumption expenditures
A) increase by the same amount.
B) increase by a smaller amount.
C) increase by a larger amount.
D) remain constant.
Ans: B) increase by a smaller amount.
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If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then
a. real rates were higher in 2001. b. real rates were higher in 1980. c. credit was more expensive in 1980. d. credit was cheaper in 2001 because the nominal rate was lower.
Suppose that in a certain nation the flat income tax rate of 40 percent is reduced to 35 percent and as a result the tax base rises from $400 billion to $600 billion. As a result, ax revenues __________, indicating the nation is on the __________ portion of its Laffer curve
A) rise; upward-sloping B) rise; downward-sloping C) fall; upward-sloping D) fall; downward-sloping
Recall the Application about the demand and price for margarine to answer the following question(s).Recall the Application. The reason that the change in demand for margarine did not change the equilibrium price in the long run is because the margarine industry is an example of ________ industry.
A. a decreasing-cost B. an increasing-cost C. a constant-cost D. a negative-cost
A normal rate of return on investment is equal to
A. accounting profit plus economic profit. B. total revenue plus total accounting profit C. accounting profit minus economic profit. D. the opportunity cost of capital plus any other implicit costs.