An inelastic supply schedule means that suppliers are unable to substitute away from producing a good in response to a tax
a. True b. False
a
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Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning
What will be an ideal response?
Real consumption tends to be
A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP.
In a market system, how are the price signals established?
A) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers. B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines. C) The forces underlying supply and demand interact to determine a market clearing price. D) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items.
Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?
a. 1 percent per year b. 2 percent per year c. 3 percent per year d. 4 percent per year