If the tax multiplier is -5.25, then the government purchases multiplier
A. is 6.25.
B. is 4.75.
C. is 0.75.
D. cannot be determined because the MPS is not given.
Answer: A
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What is the difference between positive and normative economics? How can knowledge of positive economics be useful in normative economics?
Monopolistic competition and perfect competition are different in that monopolistically competitive firms: a. cannot earn profits in the short run
b. face firm demand curves that are less elastic than perfectly competitive firms. c. face substantial barriers to entry. d. earn economic profits in the long run.
The demand for a particular brand of clothing is likely to be less elastic than the demand for all clothing.
Answer the following statement true (T) or false (F)
Which of the following policies addresses the problem posed by positive externalities?
A) a subsidy to the agent that generates the positive externality B) a tax on the agent that generates the positive externality C) limit the activity that generates the positive externality D) a subsidy to the agents that benefit from the positive externality