Recent legislation provides parents with a substantial reduction in their personal income tax liability for each child that they have. The economic way of thinking indicates that legislation of this type will
a. make it more costly for parents to provide for their children.
b. reduce the value of children to their parents and, therefore, lead to a reduction in the birth rate.
c. reduce the after-tax cost of raising children and, therefore, increase the birth rate.
d. exert no impact on either the cost of raising children or the birth rate since having children is a not an economic activity.
C
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Suppose an economy is in equilibrium. Also suppose that consumer expectations change as the threat of war increases the likelihood of an increase in taxes. This would result in:
a. an increase in equilibrium income. b. no change in equilibrium income. c. a downward shift of the aggregate supply curve. d. a decrease in equilibrium income. e. a change in the slope of the aggregate supply curve.
Helium Sports produces shoes at a factory that is designed to work at the efficient scale of production using a combination of 2 machines and 400 workers. The cost of labor has recently increased by 25%. In the given situation, which of the following steps should the company take?
a. Helium Sports should reduce production quantity to keep costs under control. b. Helium Sports should lower prices on their shoes to increase demand. c. Helium Sports should make changes to lower the opportunity costs. d. Helium Sports should update the factory with machines that require fewer workers.