The tax increases necessary to fund future Social Security and Medicare benefit payments would be
A) small, but could discourage work effort, entrepreneurship, and investment, thereby slowing economic growth.
B) large, but would have little effect on economic growth.
C) large, and could discourage work effort, entrepreneurship, and investment, thereby slowing economic growth.
D) small, and have little effect on economic growth.
Question 2
A firm chooses its profit-maximizing quantity of capital by
A) examining the total cost of capital equipment.
B) comparing the price of capital with the price of labor.
C) comparing the marginal revenue product of capital with the rental price of capital.
D) determining the rate at which the firm can borrow funds to purchase plant and equipment.
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