Consumer surplus
a. is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it.
b. is represented on a supply-demand graph by the area below the price and above the demand curve.
c. measures the benefit sellers receive from participating in a market.
d. measures the benefit buyers receive from participating in a market.
d
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Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP?
A) There is a $20 billion decrease in equilibrium GDP. B) There is a $15 billion decrease in equilibrium GDP. C) There is a $15 billion increase in equilibrium GDP. D) There is a $20 billion increase in equilibrium GDP.
The North American Free Trade Agreement is an example of
A) a beggar-thy-neighbor trade policy. B) a preferential trade arrangement. C) a multinational quota system. D) a general agreement on tariffs and trade.