If the tax function is T = t0 + t1Y where t1 equals 1/3, and if the marginal propensity to consume out of disposable income is 3/4, then the change in GDP per unit change in t0 (?Y/?t0) will be
a. ? 1.
b. + 1.
c. ? 1.5.
d. ? 2.
e. + 1.5.
C
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A profit-maximizing monopolist will receive zero profits when
A) the average total cost curve lies above the demand curve for all possible rates of output. B) the average total cost curve is tangent to the demand curve at the profit maximizing price. C) marginal revenue, marginal cost, and average total cost are all equal. D) a second firm enters the industry.
Suppose the nominal interest rate charged is 5 percent and the expected inflation rate is 2 percent. Which of the following is the expected real interest rate?
a. 2 percent b. 5 percent c. 7 percent d. -3 percent e. 3 percent
When quantity demanded decreases in response to a change in price:
A. the demand curve shifts to the left. B. the demand curve shifts to the right. C. there is a movement from one point to another along the demand curve
All else equal, the price elasticity of demand for small-budget items such as soap tends to be ________ than the price elasticity of demand for big-ticket items such as flat-screen TVs.
A. lower B. higher C. very high D. the same