Which statement is true of a tax levied on one product in a general equilibrium model?
A. Taxes always distort the most efficient flow of resources in an economy.
B. Taxes will hurt efficiency unless they are designed to offset other inefficiencies in the system.
C. Taxes cannot distort efficient resource flows because they become part of the price.
D. Taxes on producers distort efficient resource flows but taxes on consumers do not affect efficiency.
Answer: B
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Answer the next question on the basis of the following information about a hypothetical economy.Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer price index = 110 The unemployment rate is
A. 12.5%. B. 25%. C. 16.7%. D. 18.8%.
Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
A) $180 B) $100 C) $80 D) $20
Which of the following statements best describes the central bank response to recession?
a. If recession threatens, the central bank uses a contractionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the right. b. If recession threatens, the central bank uses an expansionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the right. c. If recession threatens, the central bank uses an expansionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the left. d. If recession threatens, the central bank uses an contractionary monetary policy to increase the supply of money, increase the quantity of loans, reduce interest rates, and shift aggregate demand to the left.
Refer to the information provided in Table 24.1 below to answer the question(s) that follow.Table 24.1
Refer to Table 24.1 At an output level of $1,200 billion, there is a tendency for output
A. to increase. B. to remain constant. C. to fall. D. to either increase or decrease.