The demand for apple pies is perfectly elastic. If the government taxes apple pies at $1 a pie, then
A) the seller pays the entire tax.
B) the buyer pays the entire tax.
C) the seller and the buyer split the tax evenly.
D) the seller and the buyer split the tax but the seller pays more.
E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers.
A
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Ricardian equivalence refers to
a. the equivalence of taxes and revenues in fiscal policy. b. the fact the households incorporate inflationary expectations in calculating interest payments. c. the equivalence of imports and exports in an open economy. d. the possibility that households may say save now so that they can pay the higher taxes later if there is a tax cut at the present time which drives up future interest payments. e. none of the above.
A nonmonetary opportunity cost is
A) an implicit cost. B) an explicit cost. C) a direct cost. D) an accounting cost.