In the above figure, the short-run aggregate supply curve is SAS1. If the money wage rate increases, there is
A) an upward movement along SAS1.
B) a downward movement along SAS1.
C) a shift to SAS0.
D) a shift to SAS2.
C
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If the economy experiences an unanticipated demand shock and households and firms have rational expectations, there is
A) no trade-off between unemployment and inflation in either the short run or the long run. B) a trade-off between unemployment and inflation in the long run, but not in the short run. C) a trade-off between unemployment and inflation in the short run, but not in the long run. D) a trade-off between unemployment and inflation in both the short run and the long run.
Which of the following statements about taxation is TRUE?
A) Increasing taxes will always increase tax revenues. B) Static tax analysis recognizes that an increase in taxation could lead to a decrease in tax revenues. C) Dynamic tax analysis assumes that an increase in taxation will leave the tax base unchanged. D) There is a tax rate at which tax revenues are maximized.