The government reduces the corporate profits tax. As a result, corporate profits increase. This will ________ the nonlabor income of households, causing consumption to ________ and labor supply to ________.
A. decrease; decrease; decrease
B. increase; increase; increase
C. increase; increase; decrease
D. decrease; decrease; increase
Answer: C
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The problem of bringing economic agents together to trade is referred to as the:
A) incentive problem. B) coordination problem. C) correspondence problem. D) scarcity problem.
When Pigouvian subsidy is imposed on a market with a positive externality, total surplus:
A. decreases less than the increase in consumer surplus. B. increases less than the decrease to producer surplus. C. increases more than the increase in consumer surplus. D. decreases more than the decrease to producer surplus.
Refer to the given figure where the nominal interest rate equals 6 percent and the money supply equals 600.
If the Federal Reserve wants to raise the interest rate to 8 percent, it must ________ the money supply to ________.
A. decrease; 400 B. increase; 800 C. decrease; 800 D. increase; 400
Which of the following statements is correct?
A. Neither stocks nor bonds are financial assets. B. Bonds are financial assets but stocks are not. C. Stocks are financial assets but bonds are not. D. Both stocks and bonds are financial assets.