Under perfect capital mobility, fiscal policy has the largest impact on the income under:
a. fixed exchange rates.
b. floating exchange rates.
c. dollarization.
d. a currency union.
A
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Which of the following is part of the cost of income transfers?
A) Tax-collecting agencies cost money to administer. B) Taxing incomes encourages people to work harder. C) Income transfers make the results more unfair. D) Income transfers increase the size of the economic pie. E) Income transfers are a similar to allocating resources using a lottery.
When dealing with externalities, how can we correct market failure?
a) In the case of negative externalities, the market can correct it, but in the case of positive externalities, government regulation is necessary. b) In the case of positive externalities, the market can correct it, but in the case of negative externalities, government regulation is necessary. c) In the case of both positive and negative externalities, market can correct all market failures. d) In the case of both positive and negative externalities, government regulation is necessary to induce market participants to internalize the externality.
With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will:
A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. decrease equilibrium price and increase equilibrium quantity. D. increase equilibrium price and decrease equilibrium quantity.
When elasticities of supply and demand are both equal to 1, the burden of a tax will be:
A. entirely on sellers. B. half on buyers and half on sellers. C. mostly on buyers. D. entirely on buyers.