If Supply Is More Inelastic Than Demand Is, the

question 16

Multiple Choice

If supply is more inelastic than demand is, the

• A)more the tax will fall on producers
• B)more the tax will fall on consumers
• C)less likely that a tax will have an impact on market transactions
• D)less likely it a tax will lead to tax avoidance
• E)greater the impact that a tax has on consumer expectations

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Definitions:

Loanable Funds

The money available for borrowing in the financial markets, determined by the saving rates of individuals and the banking sector's policies.

Inflation Rate

A measure of the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Real Rate

This is the interest rate adjusted for inflation, representing the real cost of borrowing and the real yield to lenders or investors.

Interest

The cost of borrowing money, typically expressed as an annual percentage rate, or the return on investment for savings.