An Excise Tax Levied on a Product Will Impose a Smaller

question 91

Multiple Choice

An excise tax levied on a product will impose a smaller relative burden on consumers (and a larger relative burden on sellers) when the:

• A) supply of the product is relatively less elastic than demand.
• B) supply of the product is relatively more elastic than demand.
• C) tax is collected from the buyers.
• D) tax is collected from the sellers.

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Definitions:

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Inflation

A continuous rise in the overall price level of goods and services within an economy over a period.

Unemployment

The condition in which a capable worker who is actively seeking employment is unable to find work.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in bank accounts.