Assuming That GDP Currently Equals Potential GDP, a Cost-Push Inflation

question 357

Multiple Choice

Assuming that GDP currently equals potential GDP, a cost-push inflation could result from which of the following?

• A) an increase in the nationʹs capital stock
• B) a large crop failure that boosts the prices of raw food materials
• C) an increase in the labor force
• D) a decrease in tax rates

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Definitions:

Excise Tax

A tax imposed on specific goods, such as tobacco, alcohol, and gasoline, which is typically levied on a per unit basis.

Tax Burden

The distribution of the financial impact of a tax system on individuals or entities, often discussed in terms of who ultimately pays the taxes.

Deadweight Loss

An economic inefficiency that occurs when the equilibrium in a market is not achieved or when a market fails to allocate resources efficiently.

Excise Tax

A tax on the sale of specific goods or services, often included in the price of the product.