________ states that if previously existing distortions exist, a distortionary tax may actually improve efficiency.
A. The rule of reverse distortion
B. The benefits-received principle
C. The principle of neutrality
D. The principle of second best
Answer: D
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The demand for a productive resource is
a. demand for the resource itself. b. derived from the demand for the good or service it produces. c. unrelated to the output it produces. d. derived from the demand for the good or service it produces AND demand for the resource itself.
The cross-price elasticity of demand between good X and good Y is 2.75. Given this information, which of the following statements is true?
A. Goods X and Y are complements. B. The demand for goods X and Y is income inelastic. C. The demand for goods X and Y is inelastic. D. Goods X and Y are substitutes.
An economy experiences a recessionary ga
A) falls, shifting the aggregate supply curve rightward. B) rises, shifting the aggregate supply curve leftward. C) rises, shifting the aggregate demand curve rightward. D) falls, shifting the aggregate demand curve leftward. E) falls, increasing potential GDP.
As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.
Answer the following statement true (T) or false (F)