You Are Required to Testify Before Parliament Concerning the Effects

question 121

Multiple Choice

You are required to testify before Parliament concerning the effects of an increase in the government surplus. Which of the following is the correct thing for you to say?

• A)The debt and interest rates will rise.
• B)The debt and interest rates will fall.
• C)The debt will rise, and interest rates will fall.
• D)The debt will fall, and interest rates will rise.

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Definitions:

Elastic Demand

A condition in which the quantity demanded of a good or service greatly changes in response to changes in its price.

Inelastic Supply

A situation where the quantity of a good supplied by producers is relatively insensitive to changes in its price.

Tax Burden

The total amount of taxes that individuals or businesses are required to pay to government entities, often expressed as a percentage of income or profit.

Elasticity

A measure in economics to show how the quantity demanded or supplied of a good or service responds to a change in price.