Use the Figure Below to Answer the Following Questions

question 157

Multiple Choice

Use the figure below to answer the following questions.
Figure 32-2
-Refer to Figure 32-2. Suppose that these diagrams refer to Canada. If the interest rate were initially at r₀ and China voluntarily restricted its exports to Canada, what would happen to the interest rate?

• A)It would stay at r₀.
• B)It would decrease because supply would shift right.
• C)It would increase because supply would shift left.
• D)It would decrease because demand would shift left.

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Definitions:

Distorting Taxes

Taxes that alter the allocation of resources and change consumer or producer behavior, leading away from an efficient market outcome.

Excess Burdens

Refers to the additional costs or losses to society beyond the direct financial effects, caused by inefficiencies or distortions in market transactions.

Benefits-Received Principle

A theory of taxation wherein individuals pay taxes in proportion to the benefits they receive from government services.

Camping Fee

A charge for the privilege of accessing and using facilities or spaces designated for camping.