If elasticity of demand is 1.8, elasticity of supply is 0.2, and a 20 percent excise tax is levied on the good:
A. sellers pay 10 percent of the tax.
B. consumers pay 20 percent of the tax.
C. consumers pay 10 percent of the tax.
D. sellers pay 20 percent of the tax.
Answer: C
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A) is possible only if the good is underproduced but is not possible if the good is overproduced. B) subtracts only from producer surplus. C) is a loss to consumers and a gain to producers. D) is a loss inflicted on the entire society.
The Bretton Woods Agreement
A) fixed the value of the U.S. dollar relative to gold. B) fixed the value of the U.S. dollar relative to the euro. C) required foreign central banks to hold certain minimum amounts of gold as foreign exchange reserves. D) required member nations, other than the United States, to disband their central banks.
Cyclical unemployment depends on a country's historical and cultural heritage
a. True b. False Indicate whether the statement is true or false
According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to
a. decreases in both the price level and real GDP. b. an increase in real GDP and an increase in the price level. c. a decrease in the price level but does not change real GDP. d. an increase in the price level but does not change real GDP.