Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?
What will be an ideal response?
Not necessarily. A tax has the same effect regardless of whether it's imposed on buyers or sellers. The division of the burden of a tax between buyers and sellers depends on the elasticities of demand and supply, not on the tax law.
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How do the capital account and the current account differ?
What will be an ideal response?
Individuals who fully insure their house and belongings against fire
A) have wasted their money if a fire does not occur. B) generally do so in order that their after-fire wealth can be equal to their before-fire wealth. C) generally do so in order that their after-fire wealth can be higher than their before-fire wealth. D) generally do so in order to guarantee that the worst outcome, a fire with no insurance, does not occur. E) can never come out as well financially after a fire as they were before it.
If a bank had demand deposits of $50 million and it faced a 25 percent required reserve ratio, it would be able to have a maximum amount of how many dollars worth of loans?
a. $50 million b. $37.5 million c. $25 million d. $12.5 million
What raises consumer expenditures?
What will be an ideal response?