Determining the idea of equilibrium

Reference no: EM131824146

Question: Economists' idea of equilibrium borrows a lot from physics. Let's push the physics metaphors a bit further. Here, we focus just on the supply side. For each set of words in brackets, circle the correct choice:

a. When the government subsidizes an activity, resources such as labor, machines, and bank lending will tend to gravitate [toward/away from] the activity that is subsidized and will tend to gravitate toward/away from activity that is not subsidized.

b. When the government taxes an activity, resources such as labor, machines, and bank lending will tend to gravitate [toward/away from] the activity that is taxed and will tend to gravitate toward/away from activity that is not taxed.

Reference no: EM131824146

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