President Bush lowered income taxes for individuals in 2001. Explain how lower income taxes affect the aggregate demand curve
What will be an ideal response?
Lowering the income tax increases the amount of disposable income available to households. Higher disposable income increases consumption at every price level. The result is a shift in the aggregate demand curve to the right.
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If real GDP is greater than nominal GDP then the GDP price index
A) is greater than 100. B) is less than 100. C) is equal to 100. D) is either equal to or greater than 100. E) None of the above answers is correct because we need to choose a new base year.
Refer to Table 15-4. What is the economically efficient output level?
A) 5 units B) 6 units C) 7 units D) 8 units
Assume a market that has an equilibrium price of $5. If the market price is set at $9, producer surplus:
A. rises for some producers because of the increased price. B. decreases for some producers because of fewer transactions taking place. C. Both A and B are true. D. Neither of these statements is true.
Suppose that just by doubling the amount of output that it produces each year, a firm's per-unit production costs fall by 30 percent. This is an example of:
What will be an ideal response?