The Surplus That Is Lost and Not Converted to Tax

question 112

Multiple Choice

The surplus that is lost and not converted to tax revenue when a tax is imposed is:

• A) deadweight loss.
• B) value that disappears.
• C) not transferred to anyone else.
• D) All of these statements are true.

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Definitions:

Money Supply

The sum of all financial resources in the form of cash, coins, and amounts in checking and savings accounts present within an economy at a given moment.

Government Securities

Financial instruments issued by a government to finance its expenditures, including bonds, bills, and notes.

Commercial Banking System

A network of financial institutions that accept deposits, offer loans, and provide other financial services to the public and businesses.

Deposits with the Fed

Funds that commercial banks and other financial institutions place in their accounts with the Federal Reserve.