If the Government Imposes an Excise Tax on a Good

question 83

Multiple Choice

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

• A) upward and the price will increase by $5.
• B) upward and the price will increase by less than $5.
• C) downward and the price will decrease by $5.
• D) downward and the price will decrease by less than $5.

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A significant decline in economic activity spread across the economy, lasting more than a few months, which was officially observed in December 2007 – June 2009.

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