Define the deadweight loss of a tax
The deadweight loss of a tax is the reduction in economic well-being of taxpayers in excess of the amount of revenue raised by the tax.
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Lee earns more than does Pat. Which of the following can explain why?
A) Pat is discriminated against. B) Lee has more human capital. C) Lee has a greater degree of specialization in earning an income. D) All of the above could be a factor leading to the wage difference.
For an imaginary economy, the value of the consumer price index was 140 in 2013, and the inflation rate was 5.0 percent between 2013 and 2014 . The consumer price index in 2014 was
a. 145.0. b. 147.0. c. 135.0. d. 133.3.
As the price level rises
a. people will want to buy more bonds, so the interest rate rises. b. people will want to buy fewer bonds, so the interest rate falls. c. people will want to buy more bonds, so the interest rate falls. d. people will want to buy fewer bonds, so the interest rate rises.
Voluntary agreements may not be a feasible method to internalize an externality when
A) the dollar value of the externality is large. B) the externality is negative rather than positive. C) there are significant transaction costs. D) there are high taxes on the firms that cause the externalities.