Suppose that a specific tax of $3 is imposed on producers of bread. The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P. What is the producers' tax burden?
A) Producers' tax burden is $1.30.
B) Producers' tax burden is $3.00.
C) Producers' tax burden is $2.00.
D) Producers' tax burden is $2.30
C
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Suppose the price level is unchanged and real GDP decreases. Then
A) nominal GDP must decrease. B) nominal GDP must remain unchanged. C) nominal GDP must increase. D) none of the above are true.
In the 1980s, the USA and the USSR negotiated a reduction in nuclear arms; this is an example of a
A) non-cooperative equilibrium. B) cooperative outcome that may not be a Nash equilibrium. C) cooperative outcome that was a Nash equilibrium. D) sub-game perfect equilibrium.
If the unemployment rate rises, which policies would both be appropriate to reduce it?
a. increase taxes, increase government spending b. increase taxes, decrease government spending c. decrease taxes, increase government spending d. decrease taxes, decrease government spending