The ability-to-pay principle of taxation:
A. has been declared unconstitutional because it deprives individuals of property without due
process of law.
B. suggests that people should pay taxes in proportion to the benefits they derive from public
goods and services.
C. suggests that taxes should vary directly with people's income and wealth.
D. suggests that taxes should vary inversely with people's income and wealth.
Answer: C
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In the above figure, assume the economy is in equilibrium at point d. Then the Fed decreases the money supply so that the new aggregate demand curve is AD1. In the long run, the new price level will be
A) 100. B) 120. C) 130. D) 110.
Which of the following is true?
A) In the long run, corporate bonds can be expected to yield a higher real rate of return than ownership of stocks. B) The risk of stock market investments can be reduced through the holding of a diverse portfolio of unrelated stocks over long periods of time. C) Stock market investors can reduce their risk if they hold shares of specific stocks for only short periods of time. D) People who invest in the stock market are virtually certain to make money.
Sulfur Dioxide Discharged (Tons)Firm AFirm B10$8,000$9,000910,00012,000815,00018,000720,00027,000628,00037,000
Table 9.7 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm and that Firm A has sold one permit to Firm B. If Firm B wants to purchase a second permit to be able to discharge 10 tons of sulfur dioxide, what is Firm B's willingness to pay?
A. $2,000 B. $3,000 C. $5,000 D. $9,000
Adverse selection and moral hazard are problems that arise in the presence of asymmetric information.
Answer the following statement true (T) or false (F)