Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-2, if the market price falls from P2 to P3, then:
A. consumer surplus increases.
B. producer surplus increases.
C. deadweight loss increases.
D. the market moves to an equilibrium price and quantity.
Answer: C
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Movement along the aggregate expenditure line is caused by a change in the level of income
a. True b. False Indicate whether the statement is true or false
Recall the Application about how a simultaneous increase in the gasoline tax and decrease in the income tax affect gasoline consumption to answer the following question(s).Recall the Application. If a tax on carbon that increases the price of gasoline is combined with a cut in income taxes to ensure that total tax revenue collected by the government does not change, then the carbon tax is:
A. revenue neutral. B. ineffective C. revenue enhancing. D. a flat tax.
Using the money demand and money supply model, an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
A) increase. B) decrease. C) not change. D) increase, then decrease.
When private benefits are less than social benefits, it means that:
A. no externality of any kind is present in the market. B. positive externalities are present in the market. C. negative externalities are not present in the market. D. positive externalities are not present in the market.