The difference between a fixed tax and a variable tax is that
A. fixed taxes can never be changed, but variable taxes can be changed.
B. a change in fixed taxes has no effect on aggregate demand, but a change in variable taxes has an impact.
C. a variable tax changes when GDP changes, but a fixed tax does not change with GDP.
D. a variable tax can be changed easily, whereas changing fixed taxes requires a constitutional amendment.
Answer: C
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All else constant, so long as it is negative, as the cross price elasticity of demand between a firm's product and those of its competitors increases, so does the market power possessed by the firm
Indicate whether the statement is true or false
As efficiency wage is higher than the market wage, it must reduce the disutility of effort for a worker
Indicate whether the statement is true or false
If we start from long-run general equilibrium of goods, forex, and the money markets, and there is a temporary expansion of the money supply, what will be the outcome?
A) GDP rises, the interest rate falls, and the exchange rate rises (depreciation). B) GDP rises, the interest rate rises, and the exchange rate falls (appreciation). C) GDP falls, the interest rate falls, and the exchange rate rises (depreciation). D) GDP falls, the interest rate rises, and the exchange rate rises (depreciation).
Refer to the information provided in Figure 12.3 below to answer the question(s) that follow. 
Figure 12.3
Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D to D', which of the following is least likely to result?
A. The demand for DVDs will increase. B. If the market for DVD players is perfectly competitive, economic profits in this industry will increase in the short run, but will fall back to zero in the long run. C. If the market for DVD players is competitive, the price will increase to $5.00 in the short and long run. D. More resources will be allocated to produce DVD players.