Consider a $4 excise tax that has been levied on suppliers of automobile tires. Legislators, in the interest of fairness, change the law so that the tax is evenly split between suppliers and demanders, with each group legally required to pay $2 per tire. In this situation, we can predict that
a. suppliers will be made better off and demanders will be made worse off.
b. the change will have no economic effect on suppliers and demanders.
c. demanders will "pass back" their share of the tax to the suppliers, so that suppliers continue to pay $4 per tire.
d. the economic incidence of the tax will be evenly split between suppliers and demanders.
b. the change will have no economic effect on suppliers and demanders.
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Scarcity raises both price and marginal utility but generally reduces total utility.
Answer the following statement true (T) or false (F)
Another benefit from entering a currency union that is not optimal would include:
A) the idea that economies interconnected in a currency union with increased trade also develop a symmetry of demand shocks. B) the reduction of interdependence and an increase in self-sufficiency. C) the cessation of disagreement over trade protection. D) the possibility of increasing the currency area.
Bonds sold by the U.S. government that offer a certain real interest rate are known as
A. denominalized securities. B. zero-coupon bonds. C. Treasury Inflation-Protected Securities. D. savings bonds.
A decrease in capital/labor ratio enhances economic growth.
Answer the following statement true (T) or false (F)