Based on the redistributive income effects, who "gains" when there is inflation? (2)
What will be an ideal response?
1) Colonial First Bank who only gives loans whose interest rate increases when inflation increases
2) Kenzie who has a salary that increases at twice the rate of inflation
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The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves, or a market with inelastic supply and demand curves. If their aim is to raise the most revenue with the smallest deadweight loss, where should the tax be placed?
A. In the market with elastic supply and demand curves B. In the market with inelastic supply and demand curves C. It is impossible to say without more information D. Since the burden is shared, it doesn't matter in which market it is placed
The marginal rate of substitution is the
A. rate at which the consumer increases utility. B. absolute value of the indifference curve. C. tradeoff rate between the two goods under consideration at any particular point. D. total utility derived at any point.
Rent controls create distortions in the housing market by:
A. increasing the supply of housing in the long run. B. raising property values. C. encouraging landlords to overspend for maintenance. D. discouraging new housing construction.
When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region, it is practicing
A) absolute advantage. B) cost disadvantage. C) regional advantage. D) comparative advantage.