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Josh - Test prep

Last updated 10 months ago

15 questions

Instructions

1

The diagram shows the impact of a specific indirect tax imposed on a demerit good. The revenue received by the government would equal:

1

Draw a diagram to show how the supply curve shifts when an ad valorem tax is introduced on a good or service.

1

Which of the following is the MAIN advantage of using indirect taxes on goods with negative externalities?

1

What is a potential drawback of using indirect taxes to reduce negative externalities?

1

The diagram shows the impact of a subsidy on a merit good. Government expenditure on the subsidy would equal:

1

What is likely to be the most effective policy solution to overcome the market failure caused by the existence of positive externalities of production?

1

Draw a diagram to show how the setting of a maximum price for a good can result in excess demand.

4

Explain what a surplus and a deficit are on the current account of the balance of payments

1

Calculate the percentage change in the United States current account deficit between 1998 and 2006.

1

What would a shift in the long run aggregate supply curve to the right be most likely to cause?

1

What is most likely to lead to a persistent surplus in a country's current account of its balance of payments?

1

Which policy is not likely to help reduce a deficit on the current account of a country's balance of payments?

4

List four methods a government might adopt to remove a persistent trade deficit

1

What is the impact of the Marshall-Lerner condition holding?

1

An economy's current account on the balance of payments is in surplus. The exchange rate is re-valued by the government.

Assuming the Marshall-Lerner condition holds, which diagram shows the impact on the current account balance?