Answer the following statement(s) true (T) or false (F)
1. A Paasche price index makes price changes seem better for the consumer than they really are.
2. A Laspeyres price index is based on the basket consumed in the later period..
3. If the consumer has the same tax bill under a head tax as under an income tax, then the consumer will be indifferent between the two taxes.
4. If the consumer has the same tax bill under a head tax as under an income tax, then less leisure will be consumed under the head tax than under the income tax.
5. The cardinal utility approach has exactly the same implications as the indifference curve approach.
1. True
2. False
3. False
4. True
5. True
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As presented in the textbook, gross domestic product is the sum of annual
A) business profits (both incorporated and unincorporated) plus all tax receipts of federal, state, and local governments. B) consumption, saving, and investment. C) expenditures for new final goods by consumers, investors, government. D) total sales of all business firms. E) wages and salaries paid or received.
The incorrect presumption that because two events tend to occur together, one must cause the other is the:
A) confusion of economists. B) blunder of science. C) fallacy of false cause. D) error of inclusion.