Fiscal policy affects the goods market through
A. changes in taxes and government spending.
B. changes in taxes and money supply.
C. changes in government spending and money supply.
D. changes in money supply.
Answer: A
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A decrease in the size of a tax is most likely to increase tax revenue in a market with
a. elastic demand and elastic supply. b. elastic demand and inelastic supply. c. inelastic demand and elastic supply. d. inelastic demand and inelastic supply.
If a country removes a tariff on imported shoes, we expect the domestic price of shoes to _______ and the quantity of shoes consumed in the domestic market to ________ .
A) fall; fall B) fall; rise C) rise; fall D) rise; rise
Government failure may result from
A. Accurate valuations of benefits but inaccurate valuations of costs. B. Operational inefficiency by the public sector only. C. Misallocation of resources only. D. Outright waste of resources by the public sector or misallocation of resources.
If the interest rate is 5 percent per year and you borrow $100 for two years, at the end of the second year you must pay back
A. $103.00. B. $93.73. C. $110.25. D. $106.99.