The underlying cause of inflation is
A. labor unions demanding higher wages.
B. businesses charging higher prices.
C. government raising taxes.
D. increasing aggregate demand.
Answer: D
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Consider the above figure. This curve suggests that as the government raises the tax rate, a point will eventually be reached at which the revenues that are collected will
A) increase. B) decline. C) approach infinity. D) become negative.
In New York City, you need a license to drive a taxicab. Each license is valid for three years, and then it expires. The holder of a license can expect to earn $10,000 in profit each year. If the interest rate is 5 percent (0.05) per year, what is the value of a newly issued taxicab license? (Assume that each year's profit is received at the end of the year.)
a. $1,990.74 b. $10,000.00 c. $14,074.07 d. $27,232.48 e. $30,000.00