Excess burden is the total burden of a tax minus the tax revenue generated by the tax.
Answer the following statement true (T) or false (F)
True
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Which of the following best describes the cause-and-effect chain of an expansionary monetary policy?
A. An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. B. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP. C. A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. D. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
Suppose that real GDP starts at 100 and grows at a rate of 10 percent per year for two years. In the third year real GDP would be
A) 110. B) 110.1. C) 120. D) 121.
In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts up and to the right, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, it will
A) shift the LR curve up. B) not shift the LR curve. C) shift the LR curve down. D) shift the IS curve up and to the right.
Do you agree or disagree with the statement that: “A monopolist always charges the highest possible price.” Explain
What will be an ideal response?