Knowledge Resources

The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The amount of the tax paid by the buyers would be greater than shown in the figure

A) only if the demand was more elastic. B) only if the demand was more inelastic. C) only if the supply was more elastic. D) if either the demand was more inelastic or the supply more elastic.

In a world of rational expectations,

A) an anticipated increase in money supply leads immediately to higher nominal interest rates. B) an anticipated increase in money supply leads immediately to lower nominal interest rates. C) an unanticipated increase in money supply leads immediately to higher nominal interest rates. D) an unanticipated decrease in money supply leads immediately to lower nominal interest rates.