The ability of the federal government to regulate the distribution of income among families and individuals is
A) enormous, as shown by the redistribution that has occurred from the rich to the poor since World War II.
B) largely limited to what can be accomplished through revisions in the rules of the game.
C) unlimited because government is sovereign.
D) virtually unlimited because few people would be willing to emigrate merely in order to escape taxation.
B
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The multiplier effect
A) explains what causes an expansion. B) has no impact on equilibrium expenditure. C) reinforces the negative effects of any reduction in spending. D) explains what causes a recession. E) explains how the economy recovers from a recession.
Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price. What is the greatest deterrent to this strategy?
A) One of the firms may decide to lower its price and take business away from the firm that charged the high price. B) The firms may find that the price they charge is greater than the price that would maximize their profits. C) An agreement by firms to charge high prices is illegal. The government can fine the firms and send their managers to jail. D) Consumers may resent having to pay high prices and not buy from either of the firms.
According to the Rybczynski theorem, if a country increases its endowment of capital and prices remain constant, then its output of both the capital and labor intensive goods will rise
Indicate whether the statement is true or false
The optimal resource use for a limited natural resource is
A. unrelated to the discount rate. B. more back loaded with a higher discount rate. C. more front loaded with a higher discount rate. D. more likely to be u-shaped with a higher interest rate.