The less elastic the supply, the
A) less likely the government is to tax the product.
B) less likely the government is to impose a price ceiling.
C) larger the fraction of any tax imposed on the product that is paid by the suppliers.
D) less elastic the demand.
C
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
As Mary's income increases by 20 percent, her demand for tickets to National Hockey League games increases by 10 percent. Mary's demand for tickets is income ________; for Mary, hockey tickets are ________ good
A) elastic; a normal B) inelastic; a normal C) elastic; an inferior D) inelastic; an inferior
A recession occurs when ________, when ________, or when both of these occur.
A. potential output grows rapidly; actual output equals potential output B. potential output grows rapidly; actual output falls below potential output C. potential output grows slowly; actual output rises above potential output D. potential output grows slowly; actual output falls below potential output
Refer to the diagram. The initial aggregate demand curve is AD 1 and the initial aggregate supply curve is AS 1 . Assuming no change in aggregate demand, the long-run response to a recession caused by cost-push inflation is best depicted as a:
A. move from a to d along the long-run aggregate supply curve.
B. rightward shift of the aggregate supply curve from AS 2 to AS 1 .
C. move from a to c to d.
D. leftward shift of the aggregate supply curve from AS 1 to AS 2 .