Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?
a. Both the size of the deadweight loss and tax revenue increase.
b. The size of the deadweight loss increases, but the tax revenue decreases.
c. The size of the deadweight loss increases, but the tax revenue first increases, then decreases.
d. Both the size of the deadweight loss and tax revenue decrease.
c
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Explain and demonstrate graphically how targeting nonborrowed reserves can result in federal funds rate instability
What will be an ideal response?
When the Fed purchased a large quantity of long-term bonds, as it did during 2008-2010 with its quantitative easing policies, but most banks held onto their new reserves, the money multiplier ________ while the monetary base ________
A) increased; increased B) increased; decreased C) decreased; increased D) decreased; decreased
As a result of moving more decision making from the periphery of the organization toward the center, typically
a. the flow of information to the decision maker that is relevant to the decision should be enhanced b. the flow of information from the decision maker that is relevant to the decision should be enhanced c. the incentive structure for the decision maker should be strengthened d. the incentive structure for the decision maker can be eliminated
If waitresses and taxi drivers do not report all of their income to the government, GDP will be understated. This is because the unreported income
a. involves the introduction of new goods. b. is part of the underground economy. c. is an example of nonmarket production. d. represents an increase in leisure time.