According to the Neo-Classical Model, What Would Not Result from the Government

question 22

Multiple Choice

According to the neo-classical model, what would not result from the government levying a tax on firms for each worker the firm lays off?

• A)Firms would be less likely to lay off workers.
• B)Firms would be less likely to hire workers.
• C)Moral hazard would encourage workers to not work as hard as before.
• D)The long-run employment rate would increase.
• E)Unemployed workers would remain unemployed for longer periods of time.

---

Definitions:

Trade Restrictions

Measures imposed by governments to regulate or limit international trade.

Tariff

A tax levied on goods imported into a country.

Imported Steel

Steel that is produced in one country and brought into another for use in manufacturing or construction.

Domestic Industry

Industries within a country’s borders that produce goods or services for the local economy.