A tremendous flood along the Mississippi River destroys thousands of factories, reducing the nation's capital stock by 5%. What happens to current employment and the real wage rate?
A) Both employment and the real wage rate would increase.
B) Both employment and the real wage rate would decrease.
C) Employment would increase and the real wage would decrease.
D) Employment would decrease and the real wage would increase.
B
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After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?
A. Price will increase, and quantity will decrease. B. Price will decrease, and quantity will decrease. C. Price will decrease, and quantity will increase. D. Price will increase, and quantity will increase.
A regressive tax means that if someone earning $25,000 pays $5,000, someone earning $50,000 must pay
A. less than $5,000. B. more than $15,000 but less than $20,000. C. less than $10,000. D. more than $10,000 but less than $15,000.