Mathematically, the value of the tax multiplier in terms of the marginal propensity to consume (MPC) is given by the formula:
a. (MPC - 1)/MPC.
b. 1-[1/(1 - MPC)].
c. 1/MPC.
d. MPC - 1.
b
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When a single candidate is chosen by majority vote in a democracy, the political systems _____
a. tend to become corrupted b. tend to be two-party systems c. tend to be one-party systems d. tend to be three-party systems
When new goods are introduced, consumers have more variety from which to choose. As a result, each dollar is worth
a. more, and the cost of living increases. b. more, and the cost of living decreases. c. less, and the cost of living increases. d. less, and the cost of living decreases.
According to classical economists, the relationship between the amount of funds households plan to save and the interest rate is
A) indirect. B) inverse. C) direct. D) independent.
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