The supply of loanable funds is not
A. upward sloping.
B. affected by people’s plans for fixed purchases.
C. a function of the interest rate.
D. the MRP of investment.
Answer: D
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Suppose that capital and labor must be kept in a fixed proportion to produce a particular good. For example, digging a trench requires one worker who has one shovel. What does this imply about returns to scale?
A) There are constant returns to scale. B) There are increasing returns to scale. C) There are decreasing returns to scale. D) Nothing.
A lump-sum tax:
A. charges the same amount to each taxpayer, regardless of economic behavior or circumstances. B. refers to annual, rather than quarterly tax payments throughout the year. C. is tied to spending habits, not income levels. D. is tied to income levels, not spending habits.
Economists believe that lower taxes should reduce unemployment because:
A. people have more incentive to find a job, knowing they will keep more of the income they earn from the job when taxes are low. B. people will not want to miss out on the opportunity to keep more of the income they earn when taxes are lower, so they will have an incentive to keep their job and not quit. C. people have more incentive to be productive if the money they earn is not being taxed as much when taxes are low. D. None of these is true.
A firm would be maximizing profit if MR > MC and TR > TC
Indicate whether the statement is true or false