If the rate of inflation in a given time period turns out to be lower than lenders and borrowers anticipated, then the effect will be a:
a. redistribution of wealth from lenders to borrowers.
b. net gain in purchasing power for borrowers relative to lenders.
c. net loss in purchasing power for lenders relative to borrowers.
d. redistribution of wealth from borrowers to lenders.
d
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Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then
A) buyers and sellers pay exactly the same share of the tax. B) buyers pay all of the tax. C) sellers pay all of the tax. D) buyers pay a smaller share of the tax than do sellers, but both buyers and sellers pay some of the tax. E) because the elasticity of demand is zero, the government collects no revenue from this tax.
The theory of consumer demand
a. can be used to explain how an individual allocates time between two competing uses b. is valid only for choices among various physical goods c. is valid only for goods and services purchased for cash d. is valid only if consumers are perfectly rational e. can explain the demand for normal goods, but not the demand for inferior goods