In terms of gains from trade, why is it true that taxes cause deadweight losses?
Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.
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Using the interest rate as a measure of the opportunity cost of holding money, the demand for money curve
A) slopes upward with respect to the rate of interest. B) is not affected by the price level. C) slopes downward with respect to the rate of interest. D) is vertical.
A relationship-specific exchange occurs when:
A. specialized investments are important. B. a partnership is dissolved. C. shareholders receive dividends. D. a partnership is initiated.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
The ________ broadly a market is defined, the more difficult it becomes to find ________.
A. more; complements B. less; goods independent of each other C. less; substitutes D. more; substitutes