A unit tax
A) is based on the value of the good being sold.
B) is a constant tax assessed on each unit of a good sold.
C) is the primary tax studied in dynamic tax analysis.
D) does not influence equilibrium price and quantity.
Answer: B
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Consumption functions would shift downward if
a. disposable incomes fall. b. disposable incomes rise. c. price levels fall. d. price levels rise.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year. Each nation has 100 workers, and each country specializes according to the principle of comparative advantage. If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year, then each country's maximum
consumption of new radios and televisions per year will be a. higher than it would be in the absence of trade because of the gains from trade. b. the same as it would be in the absence of trade. c. less than it would be in the absence of trade because neither country is specializing in the product in which it has a comparative advantage. d. less than it would be in the absence of trade because Teeveeland has an absolute advantage in both goods and so it cannot benefit by trading with Radioland.
When we measure and record economic value, we use money as the
a. liquid asset. b. medium of exchange. c. unit of account. d. store of value.