If the government imposes a specific tax on a monopoly, the consumer's tax incidence
A) can exceed 100%.
B) will always be between 0-100%.
C) may be negative.
D) will be the same as when the tax is imposed on a perfectly competitive firm.
A
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What will be an ideal response?
Refer to the information. The operational lag of fiscal policy is reflected in event(s):
Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession. (2) Economists reach agreement that the economy is moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by Congress and signed by the president. (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover. A. 1 and 2. B. 2 and 3. C. 3 and 4. D. 5.