Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping. If a unit tax is imposed in the market for this product
A) the tax burden will be shared among the government, buyers and sellers.
B) buyers bear the entire burden of the tax.
C) the tax burden will be shared by buyers and sellers.
D) sellers bear the entire burden of the tax.
C
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
In the one-period model, what do we assume about household preferences?
A) Households prefer more to less. B) Households like money. C) Households dislike taxes. D) Households care about others.
If there is initially a federal budget deficit, and taxes rise, while transfer payments fall:
a. AD increases and the budget deficit increases. b. AD increases and the budget deficit decreases. c. AD decreases and the budget deficit increases. d. AD decreases and the budget deficit decreases.
If the percent change in real GDP is 5 percent and inflation rate is 1 percent, what is the percent change in nominal GDP?
A. 2 percent. B. 4 percent. C. 0 percent. D. 6 percent.