If government increased Social Security benefits and decreased the salaries of government workers by the same amount, which of the following is the expected immediate effect?
a. An increase in the budget deficit and government purchases of goods and services
b. An increase in the budget deficit, but no change in government purchases of goods and services.
c. An increase in the budget deficit and a decrease in government purchases of goods and services.
d. No change in the budget deficit because there has been no change in government purchases of goods and services.
e. No change in the budget deficit because government purchases of goods and services have decreased by the same amount as transfer payments have increased.
e
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If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will
A) earn an economic profit. B) not suffer any losses. C) earn the largest profit possible. D) survive in the long run.
Goods with an income elasticity of demand greater than 1 are called
a. necessities b. inferior goods c. normal goods d. luxuries e. complements