A good has a perfectly inelastic supply and a downward sloping demand curve. Imposing a sales tax of $1 per unit on the sellers of the good
A) raises the price paid by demanders by more than $1.00.
B) raises the price paid by demanders by $1.00.
C) raises the price paid by demanders by less than $1.00.
D) does not change the price paid by demanders.
D
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Looking at the supply-side effects on aggregate supply shows that a tax hike on labor income
A) decreases potential GDP. B) weakens the incentive to work. C) increases potential GDP because people work more to pay the higher taxes. D) Both answers A and B are correct. E) None of the above is correct.
Which of the following would not be an example of a productivity shock?
A) The introduction of new management techniques B) A change in government regulations affecting production C) A change in the level of government transfer programs D) A spell of unusually good or unusually bad weather