How does inflation act as a tax?
What will be an ideal response?
Rapidly printing money leads to an increase in the growth rate of money supply that exceeds growth rate of real GDP. This results in inflation in the economy. A higher inflation rate further reduces the buying power of currency. Hence, printing currency reduces the buying power of currency by reducing its value among consumers and producers, but increases the revenue of the government in the form of newly printed notes.
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Estate taxes are paid by the heirs of an estate when the estate is valued over a certain amount
a. True b. False Indicate whether the statement is true or false
When the federal government becomes heavily involved in programs that favor well-organized business interest at the expense of others, the expected result is
a. more rapid economic growth, because programs of this type are generally productive. b. a reduction in rent seeking activities because political decision-makers will want to promote smaller, innovative firms rather than large firms that are a major source of political contributions. c. less innovation because political decision-makers will tend to favor older firms with a stronger record of providing political support rather than newer, innovative start-up firms. d. a decline in the competitiveness of elections, because politicians will find it more difficult to raise campaign contributions.
If the supply of labor to a firm is perfectly elastic at the going wage rate established by the forces of supply and demand then
A) the firm is price taker. B) the firm can only hire additional units of labor by driving the wage rate up. C) the wage rate has been decreasing. D) full employment exists in the labor market.
The quintessential example for the price of an input and its impact on an output is
A. corn and soybeans. B. hotdogs and hotdog buns. C. crude oil and gasoline. D. 7up and sprite.