Answer the following statement(s) true (T) or false (F)
1. If the legal incidence of a tax is entirely on suppliers, then the tax will have no economic effect on demanders.
2. An excise tax of 20 cents on gasoline shifts demand down by exactly 20 cents.
3. When a sales tax of 20¢ per soda is imposed on soda consumption, the supply curve for soda shifts down by precisely 20¢ per soda.
4. If a rise in supply and a rise in demand occur at the same time, then we know that the price must also rise.
5. If a fall in supply and a rise in demand occur at the same time, then we know that the price must also rise.
1. False
2. False
3. False
4. False
5. True
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The reason that higher interest rates reduce aggregate demand in an open economy with capital flows is that investment
A. increases generated by higher interest rates are offset by net export decreases. B. decreases generated by higher interest rates are coupled with net export decreases. C. decreases generated by higher interest rates are offset by net export increases. D. increases generated by higher interest rates are coupled with net export increases.
According to the new classical approach to the aggregate supply curve, the aggregate supply curve slopes upward because
A) increases in the price level result in lower real balances. B) higher current output results in higher desired investment. C) higher prices result in higher levels of spending as consumers attempt to stay ahead of inflation. D) businesses have difficulty in distinguishing relative price increases from general price increases.
Ceveryday expenses is:
A. irrational, since money is fungible. B. rational, since Buddy can now pay all his bills with a small credit card payment each month. C. going to make Buddy wealthier in the long run. D. rational, since he has his new computer and has money in the bank.
IMF advice to countries such as Russia and Argentina that suffer from exchange rates crises often requires these countries to adopt
a. fixed exchange rates. b. expansionary monetary policies. c. contractionary monetary policies. d. state ownership of industry.