Refer to the above figure. If the relevant aggregate demand curve was AD2, the government could do all of the following to close the existing gap EXCEPT
A. increase government spending on roads.
B. reduce corporate taxes.
C. reduce defense spending.
D. reduce marginal tax rates.
Answer: C
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Consider the demand curve of the form Q = a - bP. If a is a positive real number, and b = 0, then demand is
A) completely inelastic. B) inelastic, but not completely. C) unit elastic. D) elastic, but not infinitely.
Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift
a. demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. b. demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages. c. supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages. d. supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages.
The Herfindahl index is calculated by:
A. adding the percentage of industry output produced by the largest four firms. B. multiplying the squared value of the market shares of all the firms in the industry. C. adding the percentage of industry output produced by the largest eight firms. D. adding the squared value of the market shares of all the firms in the industry.
When a U.S. company makes a $200,000 donation to the International Red Cross to help the victims of an earthquake in India, the transaction is recorded in the
A) current account. B) one-way donations account. C) international help account. D) capital and financial account. E) official settlements account.