The deadweight loss (or excess burden) resulting from levying a tax on an economic activity is the
a. tax revenue raised by the government as the result of the tax.
b. loss of potential gains from trade from activities forgone because of the tax.
c. increase in the price of an activity as the result of the tax levied on it.
d. marginal benefits derived from the expansion in government activities made possible by the increase in tax revenues.
B
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Policies adopted by the Truman administration effectively avoided inflation during the Korean War. These policies included:
a. increased personal and corporate tax rates. b. price and wage controls. c. reduced purchases of government debt by the Federal Reserve. d. discontinuance of the practice of "pegging" interest rates. e. All of the above.