The horizontal-equity principle of taxation is not easy to use in practice because
A) some people engage in rent seeking to reduce their taxes below the level other
people pay.
B) people can use tax loopholes to reduce their incomes below the incomes of other
taxpayers.
C) different people receive different levels of government benefits even if their incomes
are the same.
D) it is difficult to determine whether people are in the same economic situation.
Expansionary monetary policy will result in
A) lower interest rates.
B) decreased rates of inflation.
C) a decrease in aggregate demand.
D) All of the above are correct.
Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of
almonds. The marginal utility of the third chocolate bar is 18 units of utility and the
marginal utility from the fourth bag of almonds is also 18. Is Adhira maximizing her
utility?
A) Yes, the marginal utility from the last unit of each good is equal.
B) No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
C) No, she must buy cut back to 3 bags of almonds to equate her quantities of the two
goods.
D) No, without information on her income and the prices of the two goods, we cannot
answer the question.
Because workers in the United States work fewer hours per week, on average, than they
did over 100 years ago,
A) workers in the United States are worse off than they were over 100 years ago.
B) workers in the United States earn less income than they did over 100 years ago.
C) GDP is lower than it would be if U.S. workers worked the same workweek they had
100 years ago.
D) GDP is higher than it would be if U.S. workers worked the same workweek they had
100 years ago.
Figure 2-4 Figure 2-4 shows
various points on three different production possibilities frontiers for a nation. Consider
the following events:
a. an increase in the unemployment rate
b. a decrease in a nation’s money supply
c. a war that kills a significant portion of a nation’s population Which of the events
listed above could cause a movement from Z to X ?
A) a, b and c
B) a and b only
C) a and c only
D) a only
E) c only
Health insurance plans which typically reimburse doctors mainly by paying a flat fee
per patient are known as
A) fee-for-service plans.
B) preferred provider organizations.
C) single-health-payer systems.
D) health maintenance organizations.
Policymakers focus on marginal tax rate changes when making changes in the tax code
because the marginal tax rate
A) determines how tax revenue will change as national income increases.
B) affects people’s willingness to work, save, and invest.
C) always equals the average tax rate which is harder to measure.
D) determines how much revenue the government will have to spend.
Autonomous expenditure is a type of expenditure that does not depend on
A) wealth.
B) expectations.
C) rates.
D) GDP.
A tax is imposed on employers and workers that are used to fund Social Security and
Medicare. This tax is sometimes referred to as
A) the Income Security Tax.
B) the federal income tax.
C) the ACIF.
D) the payroll tax.
All of the following will shift the labor supply curve except
A) an increase in labor force participation rate among women.
B) an increase in the average age of retirement.
C) an increase in the wage rate.
D) a change in a country’s immigration policy.
A decrease in the price level will
A) shift the aggregate demand curve to the left.
B) shift the aggregate demand curve to the right.
C) move the economy up along a stationary aggregate demand curve.
D) move the economy down along a stationary aggregate demand curve.
Included on the board of directors of Microsoft are Dina Dublon, former chief financial
officer of JP Morgan Chase, the president of Harvey Mudd college Maria M. Klawe,
and the vice chairman of Bank of America Charles H. Noski. These three board
members do not have a direct management role with Microsoft and are therefore
referred to as
A) inside directors.
B) outside directors.
C) competitive directors.
D) honorary directors.
Figure 4-1 Figure 4-1 shows Kendra’s
demand curve for ice-cream cones.
If the market price is $3.50, what is Kendra’s consumer surplus?
A) $9.00
B) $7.50
C) $3.50
D) $0
The production possibilities frontier model assumes all of the following except
A) labor, capital, land and natural resources are fixed in quantity.
B) the economy produces only two products.
C) any level of the two products that the economy produces is currently possible.
D) the level of technology is fixed and unchanging.
All of the following are examples of spending on factors of production in the circular
flow model except
A) Bima hires two students to work at his ice-cream store.
B) “Get Fit Together” purchases 3 new treadmills for its gym.
C) Iris buys a dozen roses for her mothers birthday.
D) The Banyan Tree rents a much larger property so that it can add a restaurant to its
facilities.
When Congress established the Federal Reserve in 1913, what was its main
responsibility? When did Congress broaden the Fed’s responsibilities?
What is a marginal benefit?
Using an aggregate demand graph, illustrate the impact of an increase in the interest
rate.
Will the use of the euro help increase economic growth in countries in the European
Union? Will it help individual countries using the euro in times of recession? Explain.
Equilibrium in a perfectly competitive market results in the greatest amount of
economic surplus, or total benefit to society, from the production of a good. Why, then,
did Joseph Schumpeter argue that an economy may benefit more from firms that have
market power than from firms that are perfectly competitive?
At each of the three points in the following graph, indicate whether planned aggregate
expenditure is greater than, equal to, or less than GDP?
What are terms of trade?
What is the difference between an invention and an innovation?