Use the Figure Below to Answer the Following Question(s)

question 218

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-8
-Refer to Figure 4-8. The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S₁ to S₂. Which of the following states the actual burden of the tax?

• A) $10 for buyers and $30 for sellers
• B) $30 for buyers and $10 for sellers
• C) The entire $40 falls on sellers.
• D) The entire $40 falls on buyers.

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Definitions:

M2

A money aggregate consisting of M1 plus savings deposits, small-denomination time deposits, money market mutual funds, and other miscellaneous near-monies.

Near-Monies

Assets that are easily convertible into cash but are not cash themselves, such as savings accounts and time deposits.

Time Deposits

Deposits that earn a fixed interest rate if held for the specified period, which can range from several months to several years; also called certificates of deposit.

Money Market Mutual Funds

Investment funds that invest in short-term debt securities, offering investors a high degree of liquidity and typically low risk.