If for any given inflation rate, the federal government lowered taxes, ________
A) it would have a similar qualitative result on output as an increase in government purchases
B) it would raise disposable income leading to higher consumption spending
C) the aggregate demand curve would shift to the right
D) all of the above
E) none of the above
D
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The price elasticity of demand is equal to
A) the percentage change in quantity demanded divided by the percentage change in price. B) the change in quantity demanded divided by the change in price. C) the percentage change in price divided by the percentage change in quantity demanded. D) the value of the slope of the demand curve.
Why doesn't a firm price discriminate based on income levels?
A) It would be nearly impossible to conveniently confirm any individual's income level. B) It is illegal to ask someone their income levels. C) It is immoral to price discriminate based on income levels. D) They do: It is common practice for firms to price discriminate based on income.