The Taxpayer Relief Act of 1997 created the Hope Higher Education Scholarship program which provides
a maximum of $1,500 in tax credits for the first two years of college for families with adjusted-gross incomes of less than $100,000. What effect do you think this act might have on the aggregate supply curve?
5. A recent breakthrough in the field of genetics will allow scientists to insert into banana trees a human gene that protects against deadly childhood diseases. This is an important breakthrough for some less-developed countries because they cannot afford the traditional vaccines for these diseases. What effect might this breakthrough have on these countries’ aggregate supply curves?
6. Explain the difference between the international trade effect, which leads to a movement along a given AD curve, and an increase in foreign incomes, which leads to a shift to a new AD curve.
7. All price indexes contain certain distortions or biases that reduce their effectiveness as measures of inflation. Describe these distortions and how they affect price indexes.
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