Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting
Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true?
A) Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre.
B) An airline cannot price discriminate because buyers can resell their tickets through the Internet.
C) An airline that price discriminates will charge Erin a higher price.
D) An airline that price discriminates will charge Deidre a higher price.
C
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Mainstream economists believe that Keynesian economists overstate the effect of the multiplier effect. Which of the following statements would mainstream economists NOT consider to be accurate?
A) A fiscals stimulus does not provide a 'free lunch' but does 'crowd out' private consumption expenditure and investment. B) A fiscal stimulus is a vital tool to fight recession and depression due to the multiplier effect. C) Effects of a fiscal stimulus are small and short lived. D) A fiscal stimulus results in bigger government, lower potential GDP, and slower real GDP growth. E) Effects of a fiscal stimulus are incapable of working fast enough to make a difference.
"The U.S. government should not use my tax dollars to subsidize people on welfare"
A) is a positive economic statement because it simply describes one person's opinion. B) is a normative economic statement because it involves a value judgment about an economic policy. C) is a positive economic statement because it predicts that my tax dollars will go to welfare. D) is a normative economic statement because it is a scientific fact.