Which of the following is true of the consumption function?
a. It becomes steeper as the income tax rate decreases
b. It becomes flatter as the income tax rate decreases.
c. It shifts upward as the marginal propensity to save increases.
d. It shifts downward as the expected future income increases.
a
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Sammy has a drone that he values at $1,500. Dean values the same drone at $2,000. Sammy decides to sell the drone to Dean for $1,800. If the government imposes a $250 tax on the sale of drones,
A) Sammy and Dean would not be able to complete the transaction. B) Sammy and Dean would still be able to complete the transaction. C) the tax would cause a deadweight loss of $500. D) Both A and C are correct.
Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?
A) Exports are $9 billion, and imports are $6 billion. B) Exports are $15 billion, and imports are $10.5 billion. C) Exports are $6 billion, and imports are $8.5 billion. D) Exports are $4.5 billion, and imports are $2 billion.