When we add a personal income tax to the macroeconomic model, the
a. multiplier becomes larger.
b. multiplier becomes smaller.
c. expenditures schedule shifts upward.
d. expenditures schedule becomes steeper.
b
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Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level. B) should decrease his output to increase his profit. C) is maximizing his profit and is making an economic profit. D) should increase his output to increase his profit. E) is not maximizing his profit but is making zero economic profit anyway.
While the classical economists believe that the only demand for money is the transactions demand, the Keynesians believe that there is also a
a. precautionary demand and a speculative demand for money b. precautionary demand and a velocity demand for money c. speculative demand and a velocity demand for money d. speculative demand and a quantity demand for money e. precautionary demand and a spending demand for money