Which of the following is true of deadweight loss?
a. It occurs when taxes are imposed on a market
b. It occurs when there is a surplus in a market.
c. It occurs when there is a shortage in an economy.
d. It occurs when there is a budget deficit in an economy.
a. It occurs when taxes are imposed on a market
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The real interest rate is 4 percent a year. When the inflation rate is zero, the nominal interest rate is approximately ________ percent a year; and when the inflation rate is 2 percent a year, the nominal interest rate is approximately ________
percent a year. A) 0; 2 B) 4; 6 C) 6; 8 D) 6; 4
Compare the effect on the price level and real GDP of a decrease in tax rates assuming a supply-side effect versus no supply-side effect. Compared to no supply-side effect, including a supply-side effect for the decrease in tax rates will cause the price
level to increase ________ and real GDP to increase ________. A) less; less B) less; more C) more; less D) more; more