Refer to the above figure. MRP0 represents
A. the supply curve for the product.
B. the demand curve for labor.
C. the supply curve for labor.
D. the demand curve for the product.
Answer: B
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You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?
a. A lump-sum tax would achieve the second goal but not the first. b. A regressive tax would achieve the second goal but not the first. c. A progressive tax could achieve both goals. d. A proportional tax could achieve the second goal but not the first.
Answer the following statements true (T) or false (F)
1) In the very short run, demand shocks will tend to change the level of output but have little effect on prices. 2) In the very short run, firms tend to respond to demand shocks by changing their prices. 3) Negative demand shocks have a more significant impact on output and employment when prices are flexible. 4) In the short run, firms are more likely to respond to demand shocks by altering inventory levels than by changing how much they produce.
If the nominal interest rate is 13 percent and the anticipated rate of inflation is 8 percent, the real interest rate is
A. 21 percent. B. -5 percent. C. 13 percent. D. 5 percent.
It is important to distinguish investment expenditures from consumption expenditures because
A) households invest and business firms consume. B) foreign firms invest and domestic firms consume C) investment, not consumption, increases the natural real GDP. D) consumption, not investment, increases natural real GDP.