How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?
a. one dollar
b. less than one dollar because the administration of and compliance with the tax laws creates jobs for people
c. more than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production
d. more than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes
e. Both c and d are correct.
E
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If the substitution effect is stronger than the income effect, a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers
A) increase; decrease B) decrease; increase C) increase; increase D) increase; have an unclear effect on
Refer to the above graph, which shows the market for beef where demand shifted from D 1 and D 2. The change in equilibrium from E1 to E 2 is most likely to result from:
A decrease in the tax on beef products An increase in the price of pork A decrease in consumer incomes An increase in the cost of cattle feed
Suppose that you borrow $10,000 for one year, and at the end of the year, you must repay $10,350. The interest rate is
A. 10.35 percent. B. 2.7 percent. C. 6.5 percent. D. 3.5 percent.
Answer the following questions true (T) or false (F)
1. The Fed can change the money supply more quickly by using open market operations as compared to discount policy. 2. The Fed has complete control over the money supply. 3. An open market purchase of Treasury securities by the Federal Reserve causes the reserves of banks to rise.