What prediction about growth would most economists make if a government enacts a tax on all transactions in financial markets?
A. The tax would reduce growth because it would make it harder for those with productive opportunities to obtain funds from savers.
B. The tax would increase growth because it would encourage people to leave the unproductive financial sector and move to a useful sector of the economy.
C. The tax would probably have no effect on growth because it would not affect capital or technology.
D. The effects would depend on whether it was borne primarily by the rich or by the poor.
Answer: A
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The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. Which of the following statements is true?
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