Suppose that, due to low profits, many individuals decide to leave the farming business. The effect of the exodus will be
A. to increase the demand for agricultural products.
B. to increase the prices of agricultural products.
C. to decrease the demand for agricultural products.
D. to decrease the prices of agricultural products.
B. to increase the prices of agricultural products.
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If the marginal propensity to consume is very close to zero, then the multiplier
A) cannot be calculated. B) is very close to one. C) is very large. D) is very close to zero. E) might be negative if the marginal tax rate is large enough.
Which of the following correctly describes incentives?
A) Incentives refer to the maximum price that a buyer is willing to pay for a good. B) Incentives are rewards or penalties that motivate people to behave in a particular way. C) Incentives are prices that are fixed by the government and not by market forces. D) Incentives refer to the minimum price at which a seller is willing to sell a product.