Using an aggregate demand graph, illustrate the impact of an increase in the price level on aggregate demand
What will be an ideal response?
This illustrates an increase in the price level on the aggregate demand curve. The actual movement is shown by moving from point B to point A. The price level moves up from P1 to P2, and the quantity of real GDP demanded declines from Y1 to Y2.
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Which of the following taxes does NOT lead to a deadweight loss?
A) A proportional income tax B) A lump-sum tax C) A progressive income tax D) A proportional tax on property
Lisa decided to give up being on the soccer team for piano lessons. Her opportunity cost of pursuing piano lessons is
A) zero, as long as someone other than Lisa pays for the lessons. B) zero, as long as someone other than Lisa paid for her soccer fees and equipment. C) the satisfaction Lisa had enjoyed by being on the soccer team. D) the satisfaction Lisa enjoys by studying the piano. E) both A and B above.