Which of the following is an example of a normative question?
A) What fraction of an income tax cut will be spent on imported goods?
B) How will an increase in the inheritance tax affect tax revenues?
C) How will an increase in unemployment benefits affect the unemployment rate?
D) Should Florida implement a state income tax to reduce its deficit?
D
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A rise in short-term interest rates that is believed to be only temporary
A) is likely to have a significant effect on long-term interest rates. B) will have a bigger impact on long-term interest rates than if the rise in short-term rates had been permanent. C) is likely to have only a small impact on long-term interest rates. D) cannot possibly affect long-term interest rates.
Given the information in Scenario 4.3, suppose that the price of erasers increases slightly from $10. How will this affect the total revenue collected by the firm?
A) Total revenue will increase. B) Total revenue will not change. C) Total revenue will decrease. D) There will be an indeterminate change in total revenue.