When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect

If the federal budget is initially balanced and government expenditures remain constant, then an increase in GDP will _________ tax revenues and create a budget _________.

A) increase tax revenues and create a budget surplus. B) increase tax revenues and create a budget deficit. C) decrease tax revenues and create a budget surplus. D) decrease tax revenues and create a budget deficit.

Assume that the yield on a security has two possible outcomes. There is a 60 percent chance it will yield 10 percent and a 40 percent chance it will yield 5 percent. The expected yield for this security is

A) 10.0 percent. B) 8.0 percent. C) 7.5 percent. D) 6.0 percent.