As the price elasticities of supply and demand increase, the deadweight loss from a tax increases
a. True
b. False
Indicate whether the statement is true or false
True
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In the Taylor rule, does the target for the federal funds rate respond differently for a recession caused by a decrease in aggregate demand and for a recession caused by a decrease in short-run aggregate supply? Explain whether there is or is not a
difference in how the target for the federal funds rate changes.
The liabilities side of a central bank's accounts consists of
A) deposits held by private banks. B) currency in circulation. C) deposits held by private banks and currency in circulation. D) deposits held by foreign banks, domestic assets, and currency in circulation. E) foreign assets and domestic assets.
The marginal decision rule will be replaced with the net present value rule when:
a. costs and benefits occur at approximately the same time b. costs are incurred immediately c. benefits are incurred immediately d. the marginal decision rule is never replaced
The principle of diminishing marginal utility says that
a. as more of a good or service is consumed, demand will decrease. b. as more of a good or service is consumed, the price will rise. c. the marginal utility of additional units consumed will increase. d. the marginal utility of additional units consumed will decline.