Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?
a. 1 percent per year
b. 2 percent per year
c. 3 percent per year
d. 4 percent per year
d
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One effect of inflation is that it is a tax that redistributes goods and services from
A) investors to savers. B) households and businesses to the government. C) businesses to households. D) government to households. E) government to businesses.
Corporations have the advantage of
a. double taxation. b. limited liability of the stockholders. c. no taxes. d. limited life.
Refer to the payoff matrix below. If Best Lights and Bright Lights both know that they will play the game a finite number of times, but neither firm knows when the last period will be, there ________ an opportunity to earn higher profit because the managers ________ worry about punishment for cheating.
A) is; will not
B) is; will
C) is not; will
D) is not; will not
Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:
A. the cost of the externality is unknown. B. it requires less technological development. C. it more heavily penalizes drivers who consume more gas than those who consume less. D. only car drivers pay for the externality.