Special interests influence tax policy at all levels of government, but ______
a. they are most effective at the local level
b. they are most effective at the state level
c. they are most effective at the federal level
d. they are equally effective at all levels of government
c
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Constantine purchased 100 shares of IBM stock several years ago for $150 per share. The price of these shares has fallen to $55 per share. Constantine's investment strategy is "buy low, sell high"
Therefore, he will not sell his IBM stock until the price rises above $150 per share. If he sells at a price lower than $150 per share he will have "bought high and sold low." Constantine's decision: A) is correct and shows a solid command of the nature of opportunity cost. B) is incorrect because the original price paid for the shares is a sunk cost and should have no bearing on whether the shares should be held or sold. C) is incorrect because when the price of a stock falls, the law of demand states that he should buy more shares. D) is incorrect because it treats the price of the shares as an explicit cost.
While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75 . She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of:
a. marginal analysis. b. basing decisions on total, rather than marginal, value. c. an unintended consequence. d. the fallacy of composition.
If the aggregate demand curve shifts to the left in the short run then the long-run equilibrium will be at a:
A. lower price level and lower level of output. B. lower price level and same level of output. C. higher price level and lower level of output. D. higher price level and higher level of output.
Government payments made to ________ firms in order to encourage ________ are called subsidies.
A. domestic; exports B. domestic; imports C. foreign; imports D. foreign; immigration