Graphically, deadweight loss is shown by the:
A. welfare loss rectangle.
B. welfare loss triangle.
C. consumer surplus loss triangle.
D. tax revenue rectangle.
Answer: B
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Suppose the required reserve ratio is 8%, excess reserve-to-deposit ratio is 2%, and the currency-to-deposit ratio is 10%. What is the value of the money multiplier?
What will be an ideal response?
Which of the following statements best represents a difference between short-run and long-run cost?
A) Less than one year is considered the short run; more than one year the long run. B) There are no fixed costs in the long run. C) In the short-run labor must always be considered the variable input and capital the fixed input. D) All of the above are true.
Which of the following thoughts do the Keynesian and the new Keynesian economists share?
a. The belief that wages and prices are not flexible in the short run b. The belief that the aggregate supply curve is always a horizontal line c. The belief that the government's role in the economy should be minimized d. The belief that the natural rate of unemployment in an economy is always zero e. The belief that prices are constant and that changes in aggregate expenditures determine equilibrium real GDP
Less demand in the economy may increase unemployment; this may lead to less spending which may reduce demand further. This process is called:
a) The upward accelerator b) The downward multiplier c) The upward PPF d) The downward mpc