In order to minimize deadweight loss generated by taxation, a tax should be placed on goods that are:
A. price elastic.
B. price inelastic.
C. expensive.
D. popular.
B. price inelastic.
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Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product
A) 2; The product is elastic. B) 0.5; The product is inelastic. C) 0.2; The product is inelastic. D) 50%; The product is inelastic.
The government wishes to close an inflationary gap by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. Decreasing government spending by $400 billion and increasing taxes by $400 billion. b. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. c. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. d. Decreasing government spending by $80 billion and keeping taxes the same. e. Doing absolutely nothing to the economy.
A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests
a. True b. False Indicate whether the statement is true or false
When comparisons are made between the earnings of whites and minorities with the same age, quantity of schooling, marital status, sector of employment, union and industry status, regional location, and annual hours worked, recent studies indicate that
a. the corrected earnings of minority men are about two-thirds the earnings of white men. b. the corrected earnings of Mexican-Americans, Asian-Americans, and American Indians were between 7 and 9 percent less than the earnings of similar white men. c. earnings differentials between whites and minorities are due almost exclusively to employment discrimination. d. most minority men now have higher earnings than white men.