As the tax wedge associated with a given economic activity gets smaller, we would expect
A) more of that economic activity to occur.
B) people to engage in less of that particular activity.
C) the distortions caused by taxes on that activity to be greater.
D) no change in the practice of that activity until the tax wedge ultimately disappears.
A
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If national income = $2,000 . autonomous consumption = $100, the MPC = 0.80, and intended investment demand is $500, then actual investment will
a. equal intended investment, and the economy will be in equilibrium b. be less than intended investment, and production and incomes will grow c. be greater than intended investment, and production and incomes will fall d. be less than intended investment, and production and incomes will fall e. be greater than intended investment, and production and incomes will grow
An example of an implicit cost is:
A. the wages paid to workers. B. the interest on business loans. C. the imputed rent on a store owned by the firm. D. the materials used to produce the product.