Suppose the tax on automobile tires is increased so that the tax goes from being a "medium" tax to being a "large" tax. As a result, it is likely that
a. tax revenue increases, and the deadweight loss increases.
b. tax revenue increases, and the deadweight loss decreases.
c. tax revenue decreases, and the deadweight loss increases.
d. tax revenue decreases, and the deadweight loss decreases.
c
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
The fixed fee a firm is able to charge as part of a two-part pricing strategy is inversely related to the amount of consumer surplus the customer realizes at the profit-maximizing level of output
Indicate whether the statement is true or false
Dollarization is a method to
A. allow limited flexibility in the country's exchange rate. B. sterilize interventions by the central bank. C. remove exchange-rate risk. D. increase the country's seigniorage profit.
Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: In 2001 interest rates dropped to 40-year lows, which decreased the cost of borrowing for consumers. (See Figure 8.6.)
A. A. B. B. C. C. D. D.