According to the quantity theory of money, an excess quantity of money supplied will lead to
A. a higher level of employment.
B. a higher price level.
C. a reduction in spending and higher interest rates.
D. a reduced level of real Gross Domestic Product (GDP).
Answer: B
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The more elastic the supply of a product, the more the actual burden of a tax on the product will:
a. fall on sellers. b. fall on buyers. c. fall equally on both buyers and sellers. d. create a smaller deadweight loss (or excess burden).
Which of the following is false of perfectly competitive firms? a. As new firms enter an industry where sellers are earning economic profits, the result will include a reduction in the equilibrium price. b. In a constant-cost industry, the industry does not use inputs in sufficient quantities to affect input prices
c. In a constant-cost competitive industry, the long-run effect of an increase in demand is an increase in industry output but no change in the industry price. d. All are true.
Some enterprising individuals produce and sell alcoholic beverages without collecting or paying legally required taxes. These “moonshiners” often have to hide their production facilities and hire fast driving delivery personnel to avoid various authorities. These moonshiners
A. are taking advantage of obvious loopholes in the tax rules. B. are making the alcohol taxes more regressive by altering who pays the taxes. C. are indicative of the tax’s excess burden even if their actions may reduce excess burden relative to no moonshining. D. are able to avoid the tax burdens on the moonshined alcohol assuming they are not caught and fined by the authorities.
When inflation causes relative-price variability,
a. consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired. b. consumer decisions are distorted, but markets are still able to efficiently allocate factors of production. c. consumer decisions are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. d. consumer decisions are not distorted and markets are still able to efficiently allocate factors of production.