The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the deadweight loss from the program?
A. $1.5 billion
B. $3 billion
C. $4.5 billion
D. $18 billion
A. $1.5 billion
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Employing the information in Figure 3-2 above, when real disposable income is 1000, savings from households would be ________ and the marginal propensity to save would be ________
A) 300; 0.1 B) 100; 0.2 C) 100; 0.1 D) 500; 0.2
Because the U.S. poverty line is an absolute measure rather than a relative one, the official U.S. poverty rate:
A. increased steadily when there was economic growth that raised the incomes of low-income families. B. fell steadily when there was economic growth that raised the incomes of low-income families. C. fell steadily when there was economic growth that caused inequality to grow among the population. D. increased steadily when there was economic growth that caused inequality to decline across the population.
According to the "misperception effect" explanation of short-run aggregate supply, firms increase output as the price level rises because they mistake the increase in overall prices for an increase in the relative price of their own output
a. True b. False Indicate whether the statement is true or false
During a recession, government deficits can grow because:
A. sales tax revenues tend to decrease because people are spending less. B. government spending often increases as part of an expansionary fiscal policy. C. income tax revenues tend to decrease because people are earning less. D. All of these are true.