Taxes adversely affect the allocation of resources because
a. they do not always fall more heavily on the rich than on the poor.
b. the taxes collected are not enough to finance government spending.
c. not everyone pays taxes.
d. they distort prices and thus distort the decisions of households and firms.
D
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If all firms expect greater demand for their products or services, they will hire _____ resources like labor and capital and the economy will experience _____
a. fewer; recession
b. fewer; growth
c. more; deflation
d. more; recession
e. more; growth
A Korean steel company produces steel in the United States, with some of its steel being exported to other nations and some of it being sold within the United States. If the prices of this steel increase, then
a. the GDP deflator and the CPI will both increase. b. the GDP deflator will increase and the CPI will be unchanged. c. the GDP deflator will be unchanged and the CPI will increase. d. the GDP deflator and the CPI will both be unchanged.
What is the most important difference between perfectly competitive markets and monopolistically competitive markets?
What will be an ideal response?
Answer the following statements true (T) or false (F)
1) A shift in the Phillips Curve to the left will improve the short-run inflation-unemployment choices available to society. 2) A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagflation. 3) There is no trade-off between unemployment and inflation in the long run. 4) There is no trade-off between unemployment and inflation in the long run. 5) The Laffer Curve underlies the contention that lower tax rates need not reduce tax revenues.