If government officials are mainly interested in generating tax revenue, then they should tax goods for which demand is price elastic.
Answer the following statement true (T) or false (F)
False
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Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
If Candidate X is running for office against Candidate Z, then:
A. all voters to the left of Z will vote for X, and all voters to the right of Z will vote for Z. B. all voters who would have voted for Y will vote for X. C. Candidate X might win. D. Candidate Z will win.
On a given day, the exchange rate for one U.S. dollar is 1.2 Canadian dollars and 0.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 1.1 Canadian dollars and 0.7 British pound. From the information given, we can say that:
a. the dollar has appreciated relative to Canadian dollars and depreciated relative to British pounds. b. the dollar has appreciated relative to British pounds and depreciated relative to Canadian dollars. c. the dollar has appreciated relative to both British pounds and Canadian dollars. d. the dollar has depreciated relative to both British pounds and Canadian dollars. e. there is no change in the relative value of the U.S. dollar.
Which of the following correctly describes the time-inconsistency problem?
a. The problem that arises when policy makers have an incentive to announce one policy to influence expectations, but then pursue different policy once those expectations have been formed and acted on. b. The problem that arises when the president and Congress have an incentive to pursue policies that are different from those of the Fed. c. The problem that arises when consumer preferences change frequently over time such that a product considered highly desirable at one point would be considered undesirable after sometime. d. The problem that arises when firms increase supply of a product in anticipation of future increase in demand for the product, but suffers a heavy loss because of a steep fall in demand.
Deflation
a. increases incomes and enhances the ability of debtors to pay off their debts. b. increases incomes and reduces the ability of debtors to pay off their debts. c. decreases incomes and enhances the ability of debtors to pay off their debts. d. decreases incomes and reduces the ability of debtors to pay off their debts.