If the government undertakes expansionary fiscal policy, it might:
A. decrease government spending.
B. increase corporate income taxes.
C. increase income taxes.
D. decrease income taxes.
Answer: D
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Consider a $4 excise tax that has been levied on suppliers of automobile tires. Legislators, in the interest of fairness, change the law so that the tax is evenly split between suppliers and demanders, with each group legally required to pay $2 per tire. In this situation, we can predict that
a. suppliers will be made better off and demanders will be made worse off. b. the change will have no economic effect on suppliers and demanders. c. demanders will "pass back" their share of the tax to the suppliers, so that suppliers continue to pay $4 per tire. d. the economic incidence of the tax will be evenly split between suppliers and demanders.
An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one shirt?
A. ½ computer B. 4 computers C. 2 computers D. ¼ computer
The more bidders there are at a second-price auction,
a. the higher the expected selling price b. the higher each bidder bids c. the more each bidder will shade his bid d. the less each bidder will shade his bid
A year-long drought that destroys most wheat crops for the season would shift the:
A. aggregate demand curve only. B. aggregate demand curve, and the short-run aggregate supply curve would shift in response. C. short-run aggregate supply curve only. D. short-run aggregate supply curve and the long-run aggregate supply curve.