When a tax is placed on the buyers of cell phones, the size of the cell phone market
a. and the effective price received by sellers both decrease.
b. decreases, but the effective price received by sellers increases.
c. increases, but the effective price received by sellers decreases.
d. and the effective price received by sellers both increase.
a
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Maryanne expects to work for another 30 years and expects to live another 10 years after she retires. If Maryanne completely smooths consumption over her lifetime, her marginal propensity to consume out of permanent increases in income is
A) 0.25. B) 0.33. C) 0.67. D) 0.75.
The crowding-out effect suggests that
a. expansionary fiscal policy causes inflation. b. restrictive fiscal policy is an effective weapon against inflation. c. a reduction in private spending that results from higher interest rates caused by a budget deficit will largely offset the expansionary effects of the deficit. d. a tax reduction financed by borrowing will increase the disposable income of households and, thereby, lead to a strong expansion in aggregate demand, output, and employment.