Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

Which of the following statements would MOST accurately describe government spending between 1970 and 2006?

a. State and local governments spend more on goods and services than the federal government, but the federal government spends more in total than state and local governments. b. As a percentage of GDP, federal government spending on goods and services increased rapidly and by 2006, the federal government spending on goods and services was about twice as high as state spending on goods and services. c. As a percentage of GDP, federal government spending has been significantly reduced, which as forced state and local government total spending to increase dramatically to accommodate these cuts. d. As a percentage of GDP, both federal and state and local government total spending have doubled.

Which of the following is a characteristic of a more efficient tax system?

a. The system minimizes deadweight loss. b. The system raises the same amount of revenue at a lower cost. c. The system minimizes administrative burdens. d. All of the above are correct.