Which of the following would likely be the most affected when the economy is in the recession phase of the business cycle?
A) gasoline sales
B) housing sales
C) beer and wine sales
D) movie ticket sales
B
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If a $10 sales tax is imposed on a good and the equilibrium price increases by $10, the tax is
A) split between buyers and sellers but not evenly. B) paid fully by sellers. C) paid fully by buyers. D) split evenly between buyers and sellers. E) perhaps split between buyers and sellers but it is impossible to determine the incidence without further information.
If the government sets a minimum price at which a good or service can be sold, it thereby creates
A) a price ceiling. B) a black market price. C) a price floor. D) an illegal price control.
An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with
A. a floating exchange-rate system. B. a fixed exchange-rate system with sterilization. C. a surplus in the overall payment balance. D. a fixed exchange-rate system without sterilization.
When negative externalities exist, a voluntary agreement can be negotiated. Which of the following statements is TRUE?
A) Voluntary agreements usually do not work since the owner has no incentive to negotiate. B) Transactions costs must be low relative to the expected benefits of reaching an agreement. C) Voluntary agreements are difficult to negotiate because they usually involve government intervention. D) Voluntary agreements always leave the owner worse off.