New classical economists stress that an increase in government expenditures financed by borrowing rather than taxes will
a. exert a strong expansionary impact on aggregate demand and real output.
b. affect the timing of taxes but not their magnitude.
c. lead to higher interest rates.
d. undermine confidence and reduce the level of private saving.
B
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Suppose the government of Southie imposes a per-unit sales tax on buyers in the market for jam and jellies. Which of the following is most likely to be an outcome of the tax?
a. A decrease in the market equilibrium price of jam and jellies b. An increase in the quantity demanded by consumers c. An increase in government revenue by an amount equal to the deadweight loss d. An increase in the demand for jams and jellies
Refer to Figure 6.6, which shows a market for taxi medallions. If the number of taxi licenses is reduced from Q2 to Q1, the total surplus of the market is represented by:
A. area ABF. B. area ABF + area BCFG. C. area ABF + area BCFG + area CDGH. D. area ABF + area BCFG + area CDGH + area DEH.