What will be the effect of a tax cut on consumption if consumption offers diminishing returns?
What will be an ideal response?
If consumption offers diminishing returns, consumers may hold back on spending their tax cuts. They will spread their spending over the long term rather than consuming the proceeds of the tax cut all at once. Thus, consumption may not increase immediately.
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GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:
A. intermediate goods. B. the underground economy. C. public transfer payments to households. D. the consumption of fixed capital.
Goods are allocated in a market system by price rationing.
Answer the following statement true (T) or false (F)
A major element of the concepts of inflation and deflation is
A) the idea that price changes are measured daily. B) their dependence on average rather than individual prices. C) the requirement that ALL prices must be moving in the same direction. D) each household's willingness to report what they pay for goods and services each month.
What are the conditions for price discrimination?