Which of the following is a consequence of the voting paradox?
A) The collective preferences of voters are not transitive and voting outcomes are inconsistent.
B) Individuals and firms who benefit from government actions engage in rent seeking.
C) A majority of voters elect a candidate that does not represent the preferences of the voter who is in the political middle.
D) Politicians support small groups of individuals and firms that benefit from special interest legislation, rather than a much larger group of voters who pay the cost for this legislation.
A
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Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?
A) They would have to be replaced by a consumption tax. B) The government would not be able to spend money on any programs. C) Everyone would have to pay less in taxes. D) The deficit would increase because of lack of revenues.
If consumers become less confident and begin to borrow and spend less, what will happen in the dynamic AD/AS model?
A. The short-run aggregate supply curve will shift downward. B. The long-run aggregate supply curve will shift to the left. C. The aggregate demand curve will shift to the left. D. The aggregate demand curve will shift to the right.