The amount by which the burden of a tax exceeds the total revenue collected is called
A. undue burden.
B. tax incidence.
C. excess burden.
D. neutrality.
Answer: C
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One result of asymmetric information in the market for bank loans is that
a. few loans are offered b. few bad loans are made c. more bad loans than good loans may be made d. lenders benefit at the expense of borrowers e. the interest on good loans will be higher than otherwise
Which of the following correctly indicates a potential path for the transmission of expansionary monetary policy to the goods and services market?
a. Higher real interest rates will lead to a decrease in both business investment and consumer purchases of durable items, causing a decrease in aggregate demand. b. Lower interest rates lead to a depreciation in the foreign exchange value of the dollar, an increase in net exports, and an expansion in aggregate demand. c. Higher interest rates will tend to increase asset prices, leading to a decrease in wealth that will decrease consumer spending and aggregate demand. d. A reduction in the general level of prices will increase the disposable income of households and aggregate demand.
Assume that policy makers are pursuing a fixed exchange rate regime. Assume that the economy is initially operating at the natural level (i.e., Y = Yn). Suppose fiscal policy makers increase taxes. This fiscal contraction will cause which of the following?
A) The real exchange rate will be permanently higher in the medium run. B) The real exchange rate will be permanently lower in the medium run. C) The effects of this devaluation on the real exchange rate will be ambiguous in the medium run. D) The real exchange rate will be unchanged in the medium run. E) none of the above
Most finance companies specialize in one of three loan types. Which of the following is not one of those three types?
A. Sales loans for purchases such as cars B. Business loans for firms to use to buy new equipment C. Margin loans for buying stock D. Consumer loans for purchases such as appliances