Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to:
A. lower the price sellers keep after paying the tax.
B. raise the price consumers pay from $3 to $4.
C. raise the price sellers keep after paying the tax.
D. lower the price consumers pay from $3 to $2.
Answer: B
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A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
The LM curve describes the relationship between interest rates and GDP for which the supply of money is equal to the demand for real balances, holding _____ constant.
A) expectations B) tastes and preferences C) the quantity of money D) expectations, tastes, and the quantity of money
An import restriction ________ the market price and ________ the total surplus of the market.
A. increases; decreases B. increases; increases C. decreases; increases D. decreases; decreases
Which of the following is NOT linked together by uncovered interest parity?
A. The domestic interest rate B. The foreign interest rate C. The current forward exchange rate D. The current spot exchange rate