Taxes affect
a. only buyers.
b. only sellers.
c. only buyers and sellers.
d. buyers, sellers, and government tax revenue.
Question 2Higher rates of interest increase the opportunity cost of holding money balances.
a. True
b. False
Indicate whether the statement is true or false
Question 3According to monetarists, changes in the money supply have long-lasting effects on the equilibrium level of real GDP.
a. True
b. False
Indicate whether the statement is true or false
Question 4When a tax is placed on a good
a. the price paid by buyers rises, and the price received by sellers rises.
b. the price paid by buyers rises, and the price received by sellers falls.
c. the price paid by buyers falls, and the price received by sellers rises.
d. the price paid by buyers falls, and the price received by sellers falls.
Question 5People hold money for transactions purposes, precautionary reasons, and asset purposes.
a. True
b. False
Indicate whether the statement is true or false
Question 6According to the monetarists, inflation is primarily caused by an increase in the money supply.
a. True
b. False
Indicate whether the statement is true or false
Question 7A tax on a good
a. raises the price that buyers effectively pay and raises the price that sellers effectively receive.
b. raises the price that buyers effectively pay and lowers the price that sellers effectively receive.
c. lowers the price that buyers effectively pay and raises the price that sellers effectively receive.
d. lowers the price that buyers effectively pay and lowers the price that sellers effectively receive.
Question 8When money demand increases, the Fed cannot keep both the money supply from rising and the interest rate from rising.
a. True
b. False
Indicate whether the statement is true or false
Question 9Monetarists would argue that in the short run, increases in the money supply act to raise both investment and consumption, while also increasing the price level.
a. True
b. False
Indicate whether the statement is true or false
Question 10If the elasticity of supply for a good is greater than the government expected:
a. Consumers will bear more of the burden of the tax than the government expected.
b. Producers will bear more of the burden of the tax than the government expected.
c. The tax will raise less revenue than the government expected.
d. Both a. and c. are true.