Prejudice and discrimination are indistinguishable

Suppose the government increases lump-sum taxes. This causes

A) consumption spending to decrease and spending on imports to increase. The effect on aggregate demand depends on whether domestic spending or spending on imports decreased the most. B) disposable income to decrease, which causes consumption spending to decrease and aggregate demand to decrease. C) government spending to decrease, which causes aggregate demand to decrease. D) disposable income to decrease, which causes aggregate supply to decrease.

Sears and Wal-Mart must decide whether to lower their prices, based on the economic profits shown in the table above. Which of the following is TRUE?

A) This situation is not a prisoners' dilemma. B) If Sears lowers its prices and Wal-Mart does not, Sears will make a $20 million economic profit. C) If Wal-Mart lowers its prices, Sears should keep its prices high. D) Both Sears and Wal-Mart would jointly be better off if they could each keep their prices high.