Which of the following statements is correct regarding the imposition of a tax on gasoline?
a. The incidence of the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
b. The incidence of the tax depends upon the price elasticities of demand and supply.
c. The amount of tax revenue raised by the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
d. The amount of tax revenue raised by the tax does not depend upon the amount of the tax per unit.
b
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A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for b, we can use observed values for Q and P and then set -b(P/Q) equal to the:
A. cross-price elasticity of demand. B. price elasticity of supply. C. income elasticity of demand. D. price elasticity of demand.
Discretionary monetary policy is monetary policy that is based on
A) the judgment of Congress about the current needs of the economy. B) the judgment of the monetary policymakers about the current needs of the economy. C) the ups and downs of the stock market. D) a rule that allows no discretion in how policymakers respond to the state of the economy. E) rules that depend upon the state of the economy.