If an Economy Has a Volatile In?ation Rate

question 68

Multiple Choice

If an economy has a volatile in?ation rate:

• A) uncertainty will increase making investment decisions di?cult.
• B) net exports will rise since goods will be imported from other countries.
• C) the business cycle will be relatively stable.
• D) the government will pursue policies to shift aggregate supply to the left.

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Definitions:

Tax Incidence

The study of who ultimately pays for and bears the cost of taxation, whether it be consumers, producers, or others.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare among entities like consumers, producers, and the government.

Supply Curve

A graph showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.

Buyers Pay

The principle where the purchaser of a good or service is responsible for paying any tax or additional cost associated with its purchase.