If the Size of a Tax Is Tripled,what Would Happen

question 187

Multiple Choice

If the size of a tax is tripled,what would happen to the deadweight loss from the tax

• A)It would double.
• B)It would triple.
• C)It would increase by a factor of six.
• D)It would increase by a factor of nine.

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Definitions:

Interest Rate

The cost of borrowing money, expressed as a percentage of the total amount loaned, or the profit earned on savings and investments.

Money Market Equilibrium

The state where the supply of and the demand for money balances, resulting in economic stability at a given interest rate.

Interest Rate

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal, or the amount earned by an investment.

Quantity of Money

The total amount of money in circulation or in existence in a country or the economy at a specific time.