If demand is perfectly elastic, a sales tax is paid by
A) only the buyers.
B) only the sellers.
C) both the buyers and sellers.
D) None of the above answers is correct.
B
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If the dollar appreciates,
a. imports to the United States become more expensive for foreigners. b. exports from the United States become more expensive for foreigners. c. imports become more expensive for U.S. citizens. d. exports from the United States become cheaper. e. the dollar will exchange for fewer units of a foreign currency.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
The direct relationship between changes in price and changes in quantity supplied is
A) a change in supply. B) shown by a shift in the supply curve. C) the law of supply. D) the law of relative production.
The City of Greenville needs to raise revenue. Alderman Black has proposed a $10 tax on red cars in the city, currently numbering 2,000 . Mayor White, who wants more than $20,000 in revenue, proposes taxing these cars at $100 each. Councilwoman
Bluestone goes even farther, suggesting a $1,000 per red car tax, arguing that her proposal will raise $2 million. If maximizing tax revenue is the only consideration, which proposal should pass? Why?