A government program would impose a 25-cent tax on each pack of cigarettes in order to fund welfare programs. Such a policy
a. is not a Pareto improvement
b. is an example of an economically inefficient economy
c. would clearly not increase tax revenues
d. is a Pareto improvement
e. could only occur in a fair economy
A
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Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for
A) the spending option because it has a bigger impact on total spending. The spending directly raises total spending plus it works through the multiplier, while the tax cut only works through the multiplier. B) the tax option because it is easier to pass. The effects on total spending would be identical. C) the spending option because it won't affect the deficit the way the tax cut would. D) the tax option because it also affects the incentives workers face. Long-run aggregate supply will increase with the tax cut, but not with the spending increase.
Which of the following is an ultimate objective of the Federal Reserve?
A) Real GDP growth B) M1 growth C) M2 growth D) Low interest rates
If one euro is equal to 0. 60 U.S. dollars, what would be the euro price of a car that costs $10,000?
A. 10,000 euros. B. 60,000 euros. C. 5,000 euros. D. 16,667 euros.
You use $50,000 of your own money to start a catering business. During the first year you earn a 5% return on that investment. If the current interest rate is 8%, you earn an economic profit of
A. -$4,000. B. -$2,500. C. -$1,500. D. $4,000.