Related to the Economics in Practice on p. 476: According to the "paradox of thrift," as individuals decrease their saving
A. income in the economy decreases because interest rates will rise and the economy will contract.
B. income in the economy will remain constant because the change in consumption equals the change in saving.
C. income in the economy will rise because the increased consumption that results from decreased saving causes the economy to expand.
D. income in the economy decreases because there is less money available for firms to invest.
Answer: C
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How might consumers for whom the borrowing constraint is binding benefit from access to relatively expensive forms of credit (e.g., pawn shops and "payday" loans)?
What will be an ideal response?
Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?
a. a proportional tax b. a progressive tax c. a regressive tax d. a lump-sum tax
Which of the following statements about Social Security is true?
A. Social Security requires workers to contribute to an account that is held in their name at the Treasury and invested in government and highly rated private sector bonds. B. Social Security is funded with income tax revenues. C. The Social Security program offers retirees retirement benefits for up to 20 years after retirement. D. Social Security transfers income from current workers to current retirees.
Suppose there are 100 firms in a market and all are identical. Firm A will hire 20 workers when the wage rate is $10, 25 workers when the wage rate is $9, and 30 workers when the wage rate is $8. The equilibrium wage rate for a number of years has been
$9. If the wage rate falls to $8, we know that A) the quantity demanded for the market will increase to 3,000 workers. B) the quantity demanded for the market will increase to more than 3,000 workers. C) the quantity demanded for the market will increase to less than 3,000 workers. D) the quantity demanded for the market will increase, but we can't tell which of the above answers is correct.