Graphically, the effect of a government subsidy on a good is shown as
A) a leftward shift of the market demand curve.
B) a rightward shift of the market demand curve.
C) a downward movement along the market demand curve.
D) no change to the market demand curve.
B
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People know that the inflation rate will decrease from 7 percent to 3 percent. As a result
A) the nominal interest rate falls by 4 percentage points. B) the nominal interest rate is constant. C) the nominal interest rate rises by 4 percentage points. D) the nominal interest rate equals 3 percent.
If everyone benefits from helping the poor,
a. government intervention cannot improve social well-being. b. eliminating taxes aimed at redistributing income will make rich people better off. c. taxing the wealthy to raise living standards of the poor can potentially make everyone better off. d. private markets can adequately provide charity programs to help the poor, despite free-rider problems.