A subsidy:
A. has a larger impact on a market than a tax of the same amount.
B. has a smaller impact on a market than a tax of the same amount.
C. is the reverse of a tax.
D. has the same impact on a market as a tax.
Answer: C
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The figure above shows the competitive market for slices of key lime pie. If the production is 40 slices per day, someone is willing to buy another slice of pie for
A) more than it costs to produce the slice. B) less than it costs to produce the slice. C) an amount equal to the cost of producing the slice. D) an amount equal to the cost of producing all 40 slices. E) an amount that is not comparable to the cost of producing the slice.
The largest component of output growth in the U.S. is
a. labor productivity growth. b. capital growth c. labor growth. d. knowledge growth. e. None of the above.
The distinction between discretionary fiscal policy and the use of automatic stabilizers is that:
a. only discretionary fiscal policy can stimulate the economy b. only automatic stabilizers can stimulate the economy. c. discretionary fiscal policy, once adopted, is built into the structure of the economy. d. automatic stabilizers, once adopted, are built into the structure of the economy. e. only discretionary fiscal policy can be used by the federal government.
The GDP figures fail to count labor services and other household production. Once this omission is taken into account,
a. the income differences between the high and low income countries are small. b. the differences in living standards between the high and low income countries are small. c. the income differences between the high and low income countries are still huge. d. the life expectancy in the high and low income countries is approximately the same.