When the fall in consumer and producer surplus exceeds the gain in tax revenues, the result is _____.
a. lower prices
b. more production
c. a positive net gain to society
d. a deadweight loss
d. a deadweight loss
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The consumer's lifetime budget constraint states that
A) the present value of lifetime consumption must be equal to the present value of lifetime gross income. B) the present value of lifetime consumption must be equal to the present value of lifetime disposable income. C) the present value of lifetime consumption plus the present value of lifetime taxes to be paid must be equal to the present value of lifetime income. D) the present value of lifetime taxes to be paid by the consumer must be equal to the present value of government spending.
If the price of jelly increases 10 percent and the amount of peanut butter purchased decreases 20 percent, then the cross-price elasticity of these goods is:
A. 0.5. B. 2. C. 0.5. D. 2.
An inferior good is one for which demand increases as
a. price decreases b. price increases c. income increases d. income decreases e. the price of a related good decreases
According to the quantity theory of money, if the economy were facing inflation, the Federal Reserve Bank could combat it by:
A. decreasing the supply of money. B. increasing the supply of money. C. cutting taxes. D. increasing taxes.