Opponents of using the inflation tax to finance government budget deficits argue that:
A. the economic slowdown produced by the inflation tax is more damaging than the hyperinflation that would occur in the absence of the inflation tax.
B. inflation is ultimately beneficial in the long run.
C. the government can raise taxes to eliminate any budget deficit.
D. the inflation tax is a temporary solution that requires ever higher levels of inflation to remain effective.
Answer: D
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The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what happens if the government imposes a $20 per firm tax on firms that service this route?
A) Neither firm has a dominant strategy. B) Not entering is a dominant strategy for both firms. C) Neither firm entering is a Nash equilibrium. D) Only firm A will enter.
An informed party can use ________ to give information to an uninformed or lesser-informed party
A) signaling B) screening C) an individual mandate D) market noise
Explain why an external benefit leads to an under-allocation of resources to the production of a good
What will be an ideal response?
An increase in expected future income will:
A. increase aggregate supply. B. decrease aggregate demand and aggregate supply. C. increase aggregate demand and aggregate supply. D. increase aggregate demand.