The graph shown demonstrates a tax on buyers. Before the tax was imposed, the sellers produced ________ units and received __________ for each one sold.

During a recession, rising transfer payments and falling tax collections

I. help cushion households from the impact of the recession. II. buffers the fall in real GDP (relative to a situation where transfer payments do not rise and tax revenues do not fall). III. tend to increase a budget deficit or reduce a budget surplus. A) I only B) I and II only C) II and III only D) I, II, and III

A theory stating that individuals make purchasing decisions based on tastes which change randomly at random intervals is not useful because

A) it is not possible to test the predictions of the model. B) tastes are not the only factor influencing behavior. C) the model is too simplistic. D) the predictions of such a model would be incorrect.