If demand is inelastic and the government decides to raise the tax on water, the price of water will increase by a ________ amount and water consumers will bear a ________ share of the tax.
A. large; large
B. large; small
C. small; large
D. small; small
Answer: A
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Public schools in the United States get most of their operating funds from
A) income taxes on corporate profits. B) tariffs collected on imported goods. C) local property taxes. D) government production and subsidies.
Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two goods each month. The price of a book is $15 and the price of going to the movies is also $15. He currently consumes four books and six movies a month. If the price of a book increases to $20, then:
A. the substitution and income effects would both predict Ethan would consume more of both goods. B. the substitution and income effects would both predict Ethan would consume less of both goods. C. the substitution effect would predict Ethan would consume more books and less movies, and the income effect would predict he would consume less of both. D. the substitution effect would predict Ethan would consume less books and more movies and the income effect would predict he would consume less of both.
Which of the following is an example of a public good?
a. Pizzas b. A crowded bus stop c. National Defense d. Cable television
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model? a. The quantity of real loanable funds per time period falls and real
GDP falls. b. The quantity of real loanable funds per time period rises and real GDP rises. c. The quantity of real loanable funds per time period rises and real GDP remains the same. d. The quantity of real loanable funds per time period and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.