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Author Question: What happens when the government imposes a unit excise tax on a good? A) The amount of the tax is ... (Read 52 times)

lunatika

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on: Jun 29, 2018
What happens when the government imposes a unit excise tax on a good?
 
  A) The amount of the tax is added to the current equilibrium price.
  B) The demand for the newly taxed good decreases.
  C) That good's supply curve shifts down by the amount of the tax.
  D) The newly taxed good's supply curve shifts vertically upward by the amount of the per-unit tax being levied.

Question 2

What are the shortcomings of using changes in per capita real GDP to measure economic growth?
 
  What will be an ideal response?


leahchrapun

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

GDP does not include all goods and services that people consider valuable. Household production is left out, as is the value of leisure. GDP also does not take into consideration cultural and spiritual aspects of life. To the extent economic growth is accompanied by environmental degradation, it is not all a gain. And finally, the level of per capita real GDP does not provide information about how the income is distributed across the population.


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